The pound has fallen sharply after the UK’s general elections resulted in a hung parliament.

The currency’s value had dropped overnight, and as trading began in London it slipped further, standing 2.3% lower at just below $1.27, with markets worried about heightened political uncertainty.

Against the euro, the pound was down 2% at 1.1344.

However, UK’s shares opened higher with the benchmark FTSE 100 index up 1.3% at 7,544.78 points.

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A fall in the value of the pound tends to boost the FTSE 100 as the majority of companies in the index have significant operations overseas. A weaker pound means profits earned abroad are worth more when converted back into sterling.

Traders had been expecting a clear victory for PM Theresa May’s Conservative Party, but are now concerned about political uncertainty.

The projection is that the Conservatives will be the largest party with 318 seats – eight short of a majority.

While the pound’s move is significant, it is far less striking than that seen in the aftermath of the Brexit vote in June 2016, when it plunged more than 10%.

Some analysts say that might reflect the diminishing prospect of a “hard” Brexit.

Sterling initially fell after an exit poll was released as the polls closed at 22:00 cast doubt on an overall Conservative majority, raising concerns about increased uncertainty and a possible delay to Brexit negotiations.

Sterling has been trading in a range between $1.28 and $1.30 in recent weeks.