Sterling "fell off a cliff" after the shock exit poll indicating the Tories may fall short of an overall majority.

The pound fell over 1.5% to 1.27 US dollars and over 1% to 1.13 euros in trading in the wake of the poll.

The dramatic plunge came ahead of Asian markets opening, while foreign exchange trading volumes were relatively low.

BBC exit poll result projected onto BBC Broadcasting House in London as counting gets underway in the General Election

Commentators predicted that shares could go the same way if the results match the poll prediction on Friday.

James Knightley, senior economist at ING, said: "Given Labour's left wing tax and spend manifesto and desire to nationalise the utility, rail and mail industries, markets are not going to react well if this is the outcome.

"The fear of higher deficits and national debt is leading to a spike in government bond yields.

"Meanwhile, the greater chance of a Scottish Independence referendum in the next couple of years (Labour may have to offer this to get the support of the SNP) will intensify political uncertainty and it is already weighing heavily on the pound."

Markets had priced in a healthy Conservative majority, giving Theresa May free rein to take charge of Brexit negotiations unhindered.

Analysts predicted the end of Mrs May's premiership if the exit poll proves to be accurate.

Craig Erlam, Senior Market Analyst at OANDA, said: "The initial exit poll suggest it's been a catastrophic campaign for Theresa May."

He added: "Sterling has fallen off a cliff after the initial exit poll.

"A hung parliament is the worst outcome from a markets perspective as it creates another layer of uncertainty ahead of the Brexit negotiations and chips away at what is already a short timeline to secure a deal for Britain."

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Michael Hewson, CMC Chief Market Analyst, writing on its website, said: "If this poll is even close to being accurate it is hard to see how Theresa May can survive as Conservative party leader let alone Prime Minister."

Neil Wilson, senior market analyst at ETX Capital, said: "Has May's great gamble failed? If accurate, a hung parliament leaves Theresa May's position as leader in serious doubt and makes the process of Brexit incredibly uncertain."

"It's fair to say the City was pretty confident of a Conservative majority.

"A hung parliament throws open all kind of doubts, uncertainty and indecision over the looming challenge of Brexit. We have the possibility of a coalition government and all that entails."

But observers also believe that a hung parliament makes the prospect of a so-called hard Brexit less likely, which would be welcomed by markets and the world of business.