Against the euro, the pound also hit a four-month high of €1.1936, up 1pc on the day. The pound also passed through its 200-day moving average - a key resistance level - for the first time since the EU referendum last June. Deutsche Bank, one of the world’s biggest sterling bears, described the early election as “a game-changer” for the pound, adding that it would raise its sterling forecasts in the coming day.

Other currency strategists in the City said the move by May lessens political uncertainty and reduce the likelihood of a ‘hard Brexit’.

Dean Turner, of UBS Wealth Management, said: “If May’s gamble pays off, it could strengthen her hand, potentially smoothing the process of leaving the EU.”

Welcoming the gains, Chancellor Philip Hammond said the bounce in the pound demonstrated the “confidence that the markets have in the future of the country, under a Conservative government with a new mandate.”

UK 10-year gilt yields, which slumped to their lowest level since mid-October before May’s statement, recovered immediately after an early election was called, rising one basis point.

Stocks, however, were rattled by the announcement. The FTSE 100, which tends to be inversely correlated to the pound as around 70pc of its constituents are dollar earners, suffered its worst day since the immediate aftermath of the Brexit vote. It surrendered 180.09 points, or 2.46pc, to close at 7,147.50, wiping almost £46bn off the value of Britain’s biggest blue chips.