The British pound faced steep losses on Friday after the UK went to the polls on Thursday. As vote count started, it was evident that the ruling Conservative Party was losing the majority it had.

By Friday's close, the UK faced another split election giving no major party a clear majority which clouded investors' decisions. This comes ahead of the scheduled UK - EU talks that are set to start from June 19.
 

UK General Elections 2017: A Hung Parliament
Investors were clearly divided with the outcome from here looking uncertain as the United Kingdom looks to break away from the EU. This led many to keep away from the markets. The general perception was that Conservative leadership would lead to a soft-Brexit. A soft-Brexit is perceived to be good for the economy, but it would still make the exit talks very uncertain and unpredictable.

The British pound was clearly volatile, falling to 1.264 briefly on Friday. This was the lowest level seen since April when the Prime Minister Theresa May called for the snap elections, just a month after she invoked Article 50.

With the hung parliament now a reality, the market outlook remains uncertain. Worries about the political outlook in the region certainly dented investor sentiment and are likely to affect investment in the country.

This was clear with the banking stocks that came under pressure on Friday. Concerns that a Labour Party could form the government and the potential policy decisions are keeping the stocks in check as well.

Despite the uncertainty, some experts believe that the market reaction to the UK elections on Friday was relatively calm.

Uncertainty expected to continue
Geoffrey Yu, from UBS Wealth Management, said, "The market is absorbing this result much better compared to the Brexit result, but a lot will depend on how things develop."

Various other analysts have also come out with mixed projections for the British pound, although the prevailing consensus is to stay on the sidelines for the moment.

Following Friday's verdict, the Conservative Party was seen to have begun negotiations with the Democratic Unionist party. Yet, despite this possible alliance, it would only give the Conservative Party a very small majority in the Parliament.

Failure to form a government by the Conservative Party will mean that the Labor Party will be getting a chance too. The left-leaning party is broadly believed to take a less hardline stance. This increases the prospects of a stronger Brexit, as the British pound is seen to react positively to this outcome.

The Conservative Party has laid out its intentions of drafting trade negotiations with countries such as the U.S. and China, although a clean break up from the EU remains in question.

For the most part, the relatively calm reaction comes from the underlying fact that regardless of the outcome, a soft-Brexit is more or less likely. This should keep the British pound supported to the upside in the near term.

Technically, the short term puts GBP/USD lower towards $1.2600 and potentially to as low as $1.2400. However, from there on, the GBP/USD should most likely attempt to push higher. The possibility of a $1.3000 in GBP/USD cannot be ruled out.