May move pushes sterling to new high
Sterling soared to a four-month high against the dollar yesterday in the wake of Theresa May's announcement of a general election in the UK.
It also rose strongly against the euro, which by yesterday afternoon was worth just under 84 pence.
After initially tumbling ahead of the prime minister's address, the pound quickly rallied to recover its losses and more.
A strong pound provides much needed relief for Irish exporters selling their produce into the UK, as it makes their products cheaper to UK consumers.
But it's only marginal relief. Prior to last June's referendum one euro was worth about 76 pence.
Chancellor of the Exchequer Philip Hammond said the sharp gains in the sterling yesterday showed markets wanted a stronger Conservative government to lead Brexit talks.
"(The) prime minister's statement this morning has sent sterling up ... demonstrating the confidence that the markets have in the future, for this country, under a Tory government with a new mandate," he said.
The blue-chip FTSE 100 index - which tends to be inversely correlated with the pound because of its mainly foreign-earning constituents - closed the day down almost 2.5pc, its biggest fall since the days after the EU referendum.
"No one was expecting this," said Luke Bartholomew, investment manager at Aberdeen Asset Management. "It will take investors some time to digest the effects of the election in the next few days."
Despite the pound's rise, it remains 15 percent below the level it was trading at before the country voted in June to leave the EU.
Meanwhile, Finance Minister Michael Noonan told Bloomberg Television that the UK and EU's negotiating positions were easing.
He said there are "certainly indications of a compromise position" where some issues will be dealt with in parallel with the primary negotiations.