The pound soared, gilts fell and British stocks surged after Prime Minister Boris Johnson's Conservative Party won a majority in the UK general election, raising hopes that an end to the Brexit deadlock will unlock pent-up investment flows.

Sterling at one point was on course for its biggest gain against the dollar since April 2017, though the moves eased a little during European trading hours. The currency touched the strongest level versus the euro since just after the 2016 Brexit vote. UK government bond yields jumped at the open as traders also slashed the odds of a rate cut in the coming year.

The news also rippled through to other assets with the euro touching a four-month high against the dollar.

Investors favour the prospect of a market-friendly Conservative government that can push through a Brexit accord, with Johnson promising all of his lawmakers will back his deal. They were skeptical of Labour leader Jeremy Corbyn's plans to overhaul the economy through increased spending and nationalizing key industries. Corbyn said he will stand down as leader of the Labour Party after a debate over the left-wing party's future.

With Brexit uncertainty and a minority government leading to turmoil, some investors have been opting to stay on the sidelines. This suggests there's scope for further gains in the pound and UK stocks, according to Amundi Asset Management.

Well-earned break

"A strong majority means the withdrawal bill gets through in January," said Jeremy Stretch, head of Group-of-10 currency strategy at Canadian Imperial Bank of Commerce. "I would still be wary of chasing the pound higher at these levels though."