UPDATE 1-Investors cut pound weakness and rate cut bets after Johnson's UK election win

Investors rushed to unwind some of their hedges against further weakness in the pound on Friday after Prime Minister Boris Johnson's Conservative Party's resounding election victory made an orderly British exit from the European Union more likely.

The premium for pound puts over calls -- the right to sell pounds versus the right to buy them -- during the next week shrank to its lowest since mid-November at nearly 1.75%, a day after it reached its highest since September 2016. That means fewer investors expect the pound to fall over the coming week.

Expectations of aggressive rate cuts by the Bank of England were also scaled back. Investors were betting the lifting of political uncertainty would prompt policymakers to take a more optimistic view of the economy. "The potential for a smooth Brexit removes some of the downside risk for the UK economy, and this should be positive for both business and consumer confidence," said Guy Foster, Head of Research, wealth manager Brewin Dolphin.

In the cash markets, the pound was holding on to its overnight gains, rising nearly 2% versus the dollar and the euro to $1.3425 and 83.15 pence respectively. It jumped more than 2.5% after exit polls were published, its biggest one-day gain in nearly three years, a remarkable jump for a currency that has become extremely volatile since the referendum.

Johnson's victory will allow him to end three years of political paralysis and take Britain out of the EU within weeks.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)