Stock markets and the pound rose sharply on Friday after Boris Johnson’s Conservatives secured a resounding general election win.

The FTSE 250 index of mid-sized UK firms surged 4 per cent to an all-time high on hopes that Mr Johnson will swiftly bring an end to the Brexit deadlock.

Sterling jumped 2.1 per cent to $1.34 and hit €1.20 against the euro, its highest level against the single currency since the immediate aftermath of the Brexit referendum.

Companies have held off investment since the June 2016 referendum as the UK remained in political and economic turmoil over its future relationship with the EU.

While Mr Johnson’s government still has to negotiate a trade deal with the EU, investors interpreted his comfortable election victory as one that will bring stability.

Big beasts lose their seats: Prominent MPs gone after election Show all 10 1 /10 Big beasts lose their seats: Prominent MPs gone after election Big beasts lose their seats: Prominent MPs gone after election Dennis Skinner - Labour Labour MP of 49 years Dennis Skinner lost his Bolsover seat to Conservative Mark Fletcher, losing 16% of the vote share PA Big beasts lose their seats: Prominent MPs gone after election Jo Swinson - Liberal Democrat Leader of the Liberal Democrats lost her Dunbartonshire East seat in a 6.8% swing to the SNP PA Big beasts lose their seats: Prominent MPs gone after election Anna Soubry - The Independent Group for Change Leader of The Independent Group for Change, formerly Conservative MP, Anna Soubry lost her Broxtowe seat, coming third behind the winning Conservatives and Labour PA Big beasts lose their seats: Prominent MPs gone after election Dominic Grieve - Independent Prominent Remain-backing MP Grieve lost the contest for Beaconsfield, coming second to the Conservatives, his former party AFP/Getty Big beasts lose their seats: Prominent MPs gone after election Luciana Berger - Liberal Democrat Luciana Berger lost the contest for Finchley and Golders Green, coming second to Conservative Mike Freer PA Big beasts lose their seats: Prominent MPs gone after election Laura Pidcock - Labour Prominent Corbyn ally Laura Pidcock lost her Durham North West seat to Conservative Richard Holden PA Big beasts lose their seats: Prominent MPs gone after election Chukka Umunna - Liberal Democrat Prominent anti-Brexit MP Chukka Umunna lost the contest for the Cities of London & Westminster, coming second to Conservative Nickie Aiken Getty Big beasts lose their seats: Prominent MPs gone after election Zac Goldsmith - Conservative Former candidate for Mayor of London Zac Goldsmith lost his Richmond Park seat to Liberal Democrat Sarah Olney PA Big beasts lose their seats: Prominent MPs gone after election Nigel Dodds - DUP Former leader of the DUP Nigel Dodds lost his Belfast North seat to Sinn Fein AFP/Getty Big beasts lose their seats: Prominent MPs gone after election Gareth Snell - Labour Labour MP Gareth Snell lost his Stoke-on-Trent central seat to the Conservatives PA

The stronger pound particularly helped housebuilders, which will see rising revenues and falling costs because they generate sales in the UK and buy raw materials overseas.

Persimmon soared 12.9 per cent, while Barratt Homes, Crest Nicholson, Taylor Wimpey, Redrow and Bellway also rose.

On the FTSE 100, utility companies made strong gains after fears of nationalisation under a Labour government evaporated. SSE rose 9.5 per cent and Centrica was up 7.7 per cent.

Travel firms also performed strongly. "A perky pound means it is cheaper to travel abroad than would have otherwise been the case, something which could benefit tour operators and travel agents," said Russ Mould, investment director at AJ Bell.

“This is not to say that all of the challenges which face these sectors or their constituents will immediately melt away."

Craig Erlam, senior market analyst at OANDA Europe, said: "It doesn't take a genius to guess which companies are flying this morning after that election result.

"Remove the threat of nationalisation and investors quickly flock back to the BTs, Royal Mails and National Grids of the world. And there's plenty more. Investors in these companies will be breathing a huge sigh of relief this morning."

Domestically focused banks including Barclays, Lloyds and Royal Bank of Scotland jumped. Exporters, which generate revenues in foreign currencies, have fared less well.

The wider economy still faces a series of problems, with growth expected to come in at just 1.3 per cent this year - its weakest level since 2009.

Businesses could face a new cliff edge at the end of next year when Mr Johnson has promised to have completed a trade deal with the EU or leave without one.

The prospect of another Brexit deadline is likely to limit any boost to investment resulting from Mr Johnson's withdrawal agreement, said Howard Archer, chief economic advisor to the EY Item club.