The pound has risen to its highest level against the euro in more than two and a half years amid growing belief in the City of an outright Conservative victory in next week’s election.

Opinion polls suggesting Labour is struggling to close a double-digit opinion poll gap sent sterling higher against the euro and the US dollar.

Currency traders said expectations that Boris Johnson would win a majority of the seats on 12 December had encouraged the belief that an end was in sight to a prolonged period of Brexit-induced uncertainty that had depressed the value of the pound.

In London trading, sterling reached €1.186 against the euro, its highest level since May 2017 and rose to $1.3158 against the dollar, a seven-month high. The pound is up 10% against the euro since August and has risen by 7% against the dollar since October.

“The broad trend in the polls is not really changing now and the Conservative lead on my poll of polls is about 11 percentage points, which is reasonably sufficient to get them a reasonably decent majority,” said Adam Cole, the chief currency strategist at RBC Capital Markets in London.

“With only a week to run to the election, if the trend in the polls stays flat, then sterling probably keeps going up.”

Even after its recent gains, the pound is still trading well below the levels at which it stood on the eve of the June 2016 referendum – €1.30 against the euro and $1.48 against the US dollar.

Richard Falkenhäll, a senior FX strategist at the Nordic bank SEB, said sterling’s recovery could be short-lived because a Conservative win would increase the risk of the UK falling out of the EU without a trade deal by the end of next year.