Market Snapshot:British Pound to Euro conversion: 1 GBP = 1.1519 EUR, see live rateBritish Pound to Dollar conversion: 1 GBP = 1.2942 USD, see live rateForeign exchange markets appear quietly confident in the Conservative's chances of increasing their majority in Parlieament with the UK currency holding recent gains made against both the Euro and Dollar.

The outcome, if confirmed, could well see Pound Sterling strengthen further, but the strength should be temporary argue strategists at one of Europe’s leading investment banks.

There is a wide range of targets being set by analysts on the favoured scenario of a Conservative win, with the GBP/USD rate seen above 1.30 and the GBP/EUR heading towards 1.17, and potentially higher, once more.

If it does rise, the question we find pertinent at this point is whether this boost will enjoy some follow-through - often spikes are followed by latent strength.

For those looking to sit back and wait for the Pound to rally, be aware that there is a good sea of opinion out there that suggests any strength is to be short-lived.

For one, market attention will rapidly shift to the start of Brexit negotiations on June 19, and unfortunately sentiment is not buoyant on this event.

It's Just a Short-Squeeze

For Strategist Jane Foley at Rabobank in London, the Pound’s rally that came after Theresa May called the election back in April should be taken as being more of a function of market positioning than anything else.

i.e it was a technical rally as the hordes of traders engaged in bets against the currency were forced out of the market by a counter-trend move.

Hardly a vote of confidence then.

“We have frequently argued that short-covering squeezes have exaggerated GBP’s reactions this year and that the pound’s apparent endorsement of PM May’s decisions on April 18 was a function of the market holding near-record short positions,” says Foley.

For the record, Foley believes that a strong Conservative win will see a bounce in the Pound, while the Pound could fall on any other outcome.

But it is important to note that while the market is still short Sterling, there is evidence that the recent round of position adjustment is over.

“This factor combined with a recently improved tone in the USD suggests that GBP/USD at 1.30 could remain a slippery target for sterling bulls,” says Foley.

Given that the Brexit negotiations are due to start on June 19 and that these are likely to be tough, Rabobank would continue to see rallies above the 1.30 level in GBP/USD as selling opportunities.

And, “we expect EUR/GBP to edge towards the 0.89/0.90 area by year end,” says Foley.

EUR/GBP 0.89/0.90 represents a Pound to Euro exchange rate of 1.1236/1.11.

Beware Sell the Fact Reaction to Conservative Win

Of six polls published on Wednesday, two showed the Conservatives widening their lead over Labour, two showed a narrowing and two were unchanged.

But they mostly suggested she would increase the small majority she inherited from David Cameron last year, shortly after the surprise referendum decision to take Britain out of the European Union.

Yesterday the battle appeared to be a two horse race, as Jeremy Corbyn’s odds to be the new Prime Minister were as short as 3/1 according to Oddschecker.

Contrast that to this morning and he’s already drifted to 11/2. The Conservative party, on the other hand, appear to have it all wrapped up; the odds of them winning the most seats is as short as 1/33 with some firms, implying a 97.1% chance of winning report Oddschecker.

“If the base-case of a majority Government for the Conservatives plays out, on the one hand this is what the market is pricing so the relief of this outcome could be viewed as Sterling-supportive,” says a briefing released by LMAX Exchange ahead of the vote.

But - here is lies an issue those watching GBP must be aware of. Pound Sterling has been rallying over recent days against the likes of the Dollar and Euro on market confidence that the Conservatives will take about 60 or so seats.

If this target is hit then there could well be a sell-off in the Pound; a classic “buy the rumour, sell the fact” type scenario that financial markets are so fond of.

“There is risk for a sell the fact reaction and also risk that as the market once again considers that this Government will push for a hard-Brexit, this could also unnerve Sterling longs and spark some profit-taking,” say LMAX Exchange.

Election Result Timeline:

1) An exit poll-based seat projection will be published when the polling stations close at 10pm.

These were spot on in 2005 and 2010, but incorrectly predicted the Conservatives would ail to secure a majority in 2015.

The pollsters who carry out the exit poll acknowledge that the accuracy of the 2005 and 2010 polls was exceptional, and have suggested that a majority prediction within 10-20 seats of the actual outcome is a good result.

2) The first official seat declaration is usually made at around 11pm, with the first bellwether results expected to come in at around 1am from Battersea (which has consistently voted for the largest party since 1987) and Nuneaton (since 1997).

But with these seats less marginal than in the past, if it is close, eyes will be on Bury North which is expected to declare at 2am.

3) The seat has voted for the largest party in every election since 1984, and the sitting Conservative MP has a slim majority

4) A clear picture of the overall result should emerge between 3am and 5am as the bulk of the results are announced.

Pound Chugs Along into Results Night

Sterling favoured the bottom of a narrow overnight range against the dollar with currency players on the sidelines awaiting today’s flurry of action.

The pound could raise the roof of its range if Theresa May can hang on to power and do so with a stronger majority in parliament that gives her more clout to call the shots on Brexit. Any shock outcome could leave the pound vulnerable.

It’s critical for Britain to get its political house in order ahead of June 19, the day Britain and Brussels are expected to start formal Brexit negotiations that could take years to hammer out.