London (CNN Business) UK stocks and the pound shot higher after British Prime Minister Boris Johnson secured an election victory that clears the way for Britain to quickly leave the European Union.

The benchmark FTSE 100 gained 1.5% in early trade in London as investors reacted to the thumping election win. The FTSE 250 index of midsize British companies added more than 4%.

The pound strengthened nearly 2% to $1.34 at 4:05 a.m. ET, its highest level since May 2018. It also rose 1.3% against the euro.

The currency had been rising steadily in recent weeks as traders bet on a Johnson win. With a solid majority in parliament, the Conservative leader can take the country out of the European Union by January 31 — removing some of the Brexit uncertainty that has hung over businesses and the economy for more than three years.

The election also ends Labour Party leader Jeremy Corbyn's hopes of transforming the UK economy through a spree of left-wing policies that scared the business community. His platform called for the nationalization of major utilities, tax rises for companies and higher earners, and awarding 10% of companies' shares to their workers. Corbyn said as the results came in that he would stand aside as Labour leader before the next election.

Read More