Sterling could hit $1.21 in hung parliament, currency strategist says

The U.K currency could see further sharp falls as the full results of the General Election show a hung parliament and no clear winner from Thursday's vote, according to one currency strategist.

Peter Chia, a foreign exchange strategist at the Singaporean multinational banking organization UOB Group, said that the move won't be as bad as that seen after the Brexit vote last year, but he still predicted a sizable drop if the results show a hung parliament.

"Compared to Brexit day where the pair fell as much as 11 percent intraday, an election outcome is unlikely to share the same deep impact on the economy and currency as Brexit does," he said in a note released on Friday morning.

"A move half the magnitude this time round may bring us eventually to 1.2100. Before that, GBP/USD looks set to first test key support of 1.2515."

By 11:00 a.m. London time, Prime Minister Theresa May's ruling Conservative party had won 318 seats while the opposition Labour Party, led by Jeremy Corbyn, had 261 seats. Meanwhile, the Scottish National Party (SNP) had won 35 seats, the Liberal Democrats were at 12 and the Democratic Unionist Party had secured 10. Voter turnout was at 68.7 percent, according to the BBC.

Despite the bruising election result for her Conservative party, U.K. leader Theresa May will seek permission from the Queen to form a new government on Friday, according to a spokesperson. The news indicates that she will aim to continue as party leader and prime minister despite calls for her to resign.

The British pound dropped sharply in Asian trade on Friday and slipped below the $1.27 handle to fresh multi-month lows. For Friday's session, it is now down around 1.6 percent against the dollar, trading at $1.2737 at 11:00 a.m. London time and continuing to fluctuate.