Sterling jumped 2.3 per cent to $1.3460, its highest point in more than a year and a half, within minutes of the poll result emerging.
The pound also climbed 1.1 per cent to €1.202 in the wake of the announcement, which predicted Boris Johnson‘s party would secure a majority of 68 seats.
Many investors hope a Conservative win would clear the way for the UK’s impending departure from the European Union and ease, at least in the short term, some of the uncertainty that has corroded business confidence since the 2016 Brexit referendum.
Sterling had climbed during the election campaign as polls consistently suggested the Tories were heading for a strong majority in the Commons.
The dipped against the dollar on Tuesday when a key YouGov poll cut the size of Mr Johnson’s projected majority to 28 seats.
But the exit poll suggests the Tories are on course to win 368 seats, giving them their biggest working majority since Margaret Thatcher was prime minister.
“The numbers that people expected were 330 maybe 350 so to see 368 on the screen is incredible,” Jordan Rochester, a currency strategist at Nomura International in London, told Bloomberg. ““The pound’s at $1.34, I think it can go to $1.3450, $1.35. Unless the exit poll is wrong, it can stay there.”
He said he had messaged his clients after seeing the exit poll and told them to “pop open a bottle of wine”.