The release of an exit poll at 10pm, which pointed to a collapse in Lib Dem and Labour fortunes and suggested a sizeable Conservative seat total, prompted a 1 per cent rise for sterling against the dollar.

Come early morning, when it became clear that the optimistic exit poll had in fact understated the Conservatives’ performance, Sterling was trading 1.8 per cent higher against the dollar, and had moved 2.3 per cent higher against the Euro in its largest gain since 2009.

The FTSE 100 also enjoyed rises, opening 2 per cent higher than yesterday (at 7,036), with the FTSE 250 up 3.7 per cent (at 18,100).

“Equity markets are up, and the pound has rallied with the prospect of the Conservatives winning an effective majority looking more and more likely as the morning rolls on,” said Caxton FX analyst Edward Knox.

“The market has been trading off polls showing a much tighter race and as a result of the uncertainty Sterling markets suffered. A continuation of this will be positive news for the pound in the short term.

“Cameron’s second stint as PM is however not without its problems. Cameron will have a fight on his hands to unite the union, and longer-term concern will turn to the EU referendum that Cameron has promised. This will be a nagging concern for the market going forward.”

However, Nigel Green, founder and chief executive of deVere Group, said that Cameron’s win “might be the calm before the storm,” and urged investors to think globally in response.

“The prospect of an in-out referendum of Britain’s EU membership has gone from risk to a reality,” Green said.

“This could lead to numerous years of ongoing uncertainty – something the markets are allergic to – and, in response, investors need to take precautions against a fall in the value of UK assets. They can do this by increasing their exposure to overseas investments.

“With many UK investors lacking geographical diversification, favouring a home bias, this should be a wake-up call to start a much-needed rebalancing to increase their exposure to international stocks, bonds and maybe property.  Now is certainly the time to think more globally.”

Dominic Rossi, Global CIO of Equities at Fidelity said that the markets would “no doubt be relieved that a likely Conservative government will continue with its fiscal consolidation policies, combined with a competitive corporate tax policy. We expect equity markets and the FTSE 100, which surpassed a record high in April, to continue to trend upwards.”

Dominic’s colleague Andrew Wells, Global CIO of Fixed Income at Fidelity, said the Conservative win would “probably be positive for both Sterling and Gilts.”

Tom Stevenson, investment director at Fidelity Personal Investing, noted that the firm’s own research suggested that investors remain upbeat about the stock market, with over a quarter (26 per cent) saying they were likely to increase their exposure to the UK in the year ahead.