By Ritvik Carvalho
LONDON (Reuters) - Sterling and UK domestic stocks have rallied strongly this month as betting markets sharply increase the chances that Britain's incumbent Conservative Party will secure a parliamentary majority in the country's first Christmas election in nearly a century.
Britain goes to the polls on Dec. 12 to try to break the Brexit deadlock in parliament more than three years since the country voted to leave the European Union.
Odds of an overall Conservative majority tumbled to 4/9 on online betting exchange Betfair Exchange earlier this week, the shortest odds for the party in the two years that the market has been open.
The odds implied a 69% probability of the Tories winning an overall majority. In addition to polls, traders closely follow betting markets for a steer on the outcomes of political events such as elections.
As the following graphic shows, both the pound as well as the FTSE 250 index (FTMC) of UK mid-cap stocks have rallied as the implied probability of a Conservative majority has risen.
Click here to view the related graphic https://fingfx.thomsonreuters.com/gfx/mkt/12/8896/8808/graphics.png