Pound, yuan soar in Asian trade

The pound hit multi-year highs against peers on Friday after a convincing Conservative Party win in the UK election, which is expected to clear the Brexit political gridlock that has hounded Britain's markets for years.

The lifting of one major cloud hanging over currency markets came amid signs another might be clearing with reports of a possible breakthrough in Sino-US trade negotiations pushing the Chinese yuan to a four-month top and nudging the Australian and New Zealand dollars higher.

UK Prime Minister Boris Johnson's Conservatives have won enough seats to give them an outright majority in parliament, broadcaster ITV said, which would relieve almost four years of uncertainty about when Brexit would take place.

"We've already seen a strong reaction in the pound from the exit poll," said Michael McCarthy, chief market strategist at CMC Markets in Sydney.

Against the euro, sterling rose around 2% to as high as 82.80 pence, the highest since July 2016, which is shortly after the Brexit referendum that hammered the currency.

The pound surged more than 2% to reach $1.3516, the highest since May 2018, before settling at $1.3469.

That contrasts with the more than 10% plunge that immediately followed Britain's vote to leave the European Union in June 2016, which wiped $2 trillion off world markets.

ITV's report of an outright majority came after early results and exit polls suggested that Johnson would get a majority of 86 - the largest of any Conservative leader since Margaret Thatcher won in the 1980s.

Such a commanding win would empower him to deliver Brexit on January 31.

In Asian currencies, the yuan gapped higher and the Japanese yen fell after a source told Reuters that the United States and China have agreed some tariff reductions and a delay in US tariffs on Chinese goods set to go effect on December 15.

In the onshore market, the Chinese yuan surged to 6.9570, the strongest level since August 2.

In the offshore market, the yuan pulled back slightly to 6.9672 per dollar, after surging more than 1% on Thursday to the highest since August 1 due to relief about a resolution to trade friction. The Australian dollar rose 0.2% to $0.6925 after briefly touching the highest since July. The New Zealand dollar also jumped to $0.6636 to reach the highest since July.

The yuan rallied and the yen fell sharply late on Thursday after Bloomberg News reported that US President Donald Trump signed off on a trade deal with China that will delay a new round of tariffs scheduled for December 15. Against the dollar, the yen fell 0.28% to 109.63, the weakest since December 2.

The euro rose 0.35% to $1.1171, slightly below its highest since August 13.

The common currency got a boost against the greenback after the European Central Bank's new president, Christine Lagarde, made upbeat comments about the euro zone economy in her first press conference on Thursday. The dollar index against a basket of six major currencies fell 0.59% to 96.819, approaching the lowest since July this year.