On the latest market reaction to the UK election, David Madden, market analyst at CMC Markets UK, said:

The FTSE 100 is sliding today as dealers are concerned about the UK general election. If you take an average of the polls conducted, it points to a Conservative win but some investors have less confidence in the polls, in the wake of Brexit and President Trump. The UK stock market would prefer a Tory victory as the party is more in favour of free market economics than Labour. The ground lost by the Conservatives in the past couple of weeks has rattled some traders.

So far markets seem to be taking the day’s big events in their stride. Connor Campbell, financial analyst at Spreadex, said:

There’s been a bit more movement this afternoon, but nothing to quite deliver on the promise of ‘triple threat Thursday’.

So far James Comey’s appearance in front of the Senate intelligence committee has done little to disrupt the US markets – if anything the dollar is looking pretty perky, rising against both the pound and the euro. Of course it’s early days yet, with a couple of hours to go until the former FBI chief’s public testimony is finished. Who knows what it will uncover?

Elsewhere the ECB largely went through the motions this afternoon. Though the ECB’s inflation forecasts cuts had already been leaked, the central bank did still pull a mild surprise out of the bag by dropping the reference to lowering interest rates, stating that they would ‘remain at their present levels for an extended period of time’. Yet Draghi made sure that this wasn’t taken as too hawkish, something that only ended up disappointing the euro, which fell half a percent against the dollar and 0.1% against the pound.

And what of the UK? Well, the FTSE found itself down by around 0.2%, while the pound gradually shed its early growth, both saving any major movements until they get a glimpse at the first trickle of results this evening.

A reminder that ex-FBI head James Comey is testifying at the moment. So far there has been little market reaction, with the Dow Jones Industrial Average down just a couple of points.

Here’s a flavour of the meeting, with Comey explaining why he started making contemporaneous notes about his discussions with President Trump:

Why did Comey decide to document that [first] discussion. What was it about that meeting?

Comey replies:

“A combination of things. The circumstances, the subject matter and the person I was interacting with.”

Comey says he was alone with the president-elect discussing weighty matters.

Then:

I was honestly concerned that he might lie about the nature of our meeting, and so I thought it was important to document it.

Our live blog is here:

The European Central Bank has got the eurozone economy moving again, but will it last, asks our economics editor Larry Elliott:

Growth forecasts revised up. Inflation forecasts revised down. Jobs being created. Take a bow Mario Draghi. Urged on by its proactive boss, the European Central Bank has achieved what looked impossible until recently: it has got the eurozone economy moving again.

Draghi should milk the applause while he can because the eurozone’s sweet spot won’t last for ever. It didn’t in the US and it didn’t in the UK, two countries that pursued exactly the same macro-economic strategy as the ECB, only earlier.

His full analysis is here:

More reaction to Draghi and the ECB:

Fawad Razaqzada, technical analyst at Forex.com, said:

There was so much fuss made about this key ECB meeting and it ended up being a bit of a damp squib. The central bank and its president Mario Draghi delivered contradictory statements about inflation and probably left many market participants feeling somewhat disappointed that there wasn’t anything concrete announced. To be fair, the leaked inflation and growth forecasts earlier this week had already taken the edge out of this meeting and many people had already prepared to hear a more dovish than a hawkish ECB. Hence, the euro didn’t exactly fall off a cliff.

Back with the European Central Bank, and Carsten Brzeski at ING Bank has commented again following Mario Draghi’s press conference:

It was a bit like in the good old days when ECB watchers looked out for code words like “vigilance”. This time around, all eyes were on the ECB’s forward guidance on interest rates and the risk assessment for the economic outlook. On both, the ECB delivered some changes. As regards the forward guidance on interest rates, it was not about what the ECB said but what it actually didn’t say. The ECB omitted the reference that interest rates could even be lower than their present levels and therefore dropped the easing bias for interest rates. Let’s not forget, however, that at the same time, the ECB kept the easing bias on QE, sticking to the formulation that the ECB would be willing to step up its monthly asset purchases if need be. Also, Draghi remarked that the ECB will remain in the market for a long while and the QE tapering was not discussed at today’s meeting. As regards the ECB’s macro-economic assessment, the ECB upgraded the risk to the growth outlook from negative to now “broadly balanced”. Actually the first time since 2011 that the ECB calls the outlook for growth balanced.

The improved economic outlook, however, has not yet led to any significant inflationary pressure in the Eurozone. This picture was reflected in the ECB staff’s economic projections which were marginally upgraded to 1.9% (during the Q&A session, Draghi said that due to the upward revision of 1Q GDP, growth would actually now come in at 2%), 1.8% and 1.7% in 2017, 2018 and 2019 respectively. At the same time, the inflation projections were revised downwards to 1.5%, 1.3% and 1.6% for 2017, 2018 and 2019. Even though the downward revision was mainly the result of lower oil prices and a slightly stronger exchange rate, subdued inflation rates remain the biggest concern for the ECB. Reasons for low inflation rates are in our view not only the slack in the Eurozone economy, still high unemployment and a high number of (involuntary) part-time and low-wage employment but also globalisation and digitalisation.

In our view, today’s ECB meeting was a very first baby step towards eventual tapering. It is obvious that the ECB is trying to be as cautious as possible to very gradually get out of the unconventional monetary policy measures. Therefore, this process of preparing markets extremely carefully with words and changes in the communication will continue and can take a long while before the ECB delivers new action. In this context, the low inflation forecasts in our view argue in favour of only a mild tapering and probably a tapering without an end date on it. There is clearly room for another “longer but lower” announcement for 2018 later this year.

All in all, the ECB today delivered two important linguistic changes to its official communication which were more than only words. These changes marked the official start of a taper tiptoeing. A tiptoeing which will still take a long while before it could be called policy normalisation.

Q: The economy has started to improve nicely; is that because of QE or despite QE?

It’s because of QE - we’re here because of that, smiles Draghi (perhaps inwardly fuming at this implied criticism of his precious stimulus package).

And then he reels off the evidence that QE has worked:

Eurozone growth in the first quarter of 2017 has been revised up today from 0.5% to 0.6%.

The PMI indices, which track private sector output, are at their highest level since April 2011.

The eurozone economic sentiment is close to its highest level, set in 2007.

And unemployment is the lowest since 2009....and five million jobs have been created in the last three and a half years, more than in America.

And that’s the end of the ECB press conference.

Another nudge to Europe’s elected leaders to crack on with the job:

Draghi is trying to cool speculation that the ECB is inching towards the exit of its stimulus programme....

Q: Could the ECB increase its QE programme if the economy weakens?

Draghi says that there is adequate “flexibility” in the asset purchase scheme.

An Estonian journalist asks if her country is unfairly missing out from the ECB’s asset purchase scheme, because it doesn’t have any government debt for the ECB to mop up.

Draghi argues that Estonia benefits from QE’s positive impact on the euro area, as it is an open economy.

Q: Why did the ECB decide that Santander was the best candidate to take over Banco Popular?

Vice-president Vítor Constâncio says that the ECB concluded that Popular was “failing or likely to fail”, as a bank run was taking hold and liquidity was running low.

But the final decision on its future was taken by the Single Resolution Board (an independent agency) not the ECB

Q: Did the ECB discuss when to start normalising monetary policy?

No, says Draghi.... but then he remembers that two council members made some observations about this issue.

I suspect that one of them was Germany’s top central banker, Jens Weidmann.

Q: Could a prolonged lower inflation rate force the ECB to change its forward guidance and raise its negative deposit rate before ending its QE programme? [currently it promises to complete the asset purchase scheme before tackling interest rates]

“No, no” says Draghi, emphatically.

Nothing substantial has happened to inflation, other than changes to the oil price, he insists.

The euro has shed half a cent against the US dollar after Mario Draghi announced the ECB has slashed its inflation forecasts.

Q: Did the ECB act quickly enough to tackle Banco Popular (the Spanish bank which was rescued by Santander this week).

Draghi says he can’t comment on individual institutions, but he hails the “timely action” of the regulators who handled the sale.

Onto questions

Q: Were today’s decisions unanimous?

We didn’t have a vote, but I didn’t hear any dissenting voices, Draghi replies (presumably he hadn’t stuck his fingers in his ears....)

Draghi ends his statement with his traditional call on European governments to do more to tackle structural problems in their economics, and underpin the recovery.

The leaks were true! The ECB has cut its forecasts for inflation over the next few years.

Here are the new forecasts for CPI inflation:

• 2017: 1.5%, down from 1.7% previously
  
• 2018: 1.3%, down from 1.6%
  
• 2019: 1.6%, down from 1.7%
  

Draghi says this is mainly due to lower oil prices.

This really is a historic day.....

You might have expected the euro to rally, after the ECB dropped its pledge to cut interest rates to fresh lows if needed.

But actually the single currency has fallen a little, down 0.3% today at $1.1225, after a sudden spike when the ECB announcement hit the wires.

That shows that investors expected today’s change in language, and are also anticipating a dovish performance from ECB chief Mario Draghi in a few minutes.

The ECB has also voted to keep creating €60bn of new money each month, to buy government and corporate bonds in an attempt to get inflation up.

The bank has also pledged to boost this QE programme if needed, saying:

If the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, the Governing Council stands ready to increase the programme in terms of size and/or duration.

It’s nearly time for the first of today’s ‘triple threats’ -- the results of today’s European Central Bank meeting, followed by Mario Draghi’s press conference.

Investors across the eurozone, and beyond, will be looking closely for signs that the ECB could adjust its monetary policy stance, especially after today’s growth upgrades.

Dennis de Jong, managing director at UFX.com, explains:

While investors have their eyes and ears glued to the UK’s general election, today’s EU GDP release and this afternoon’s interest rate decision could have big ramifications for financial markets.

“Most were expecting the upward revision of 0.6% to be confirmed and the latest estimate of EU GDP, although positive, is unlikely to alter Mario Draghi’s thinking ahead of his lunchtime press conference.

“When Draghi speaks later today, investors will be listening out for any dovish tones on interest rates. The ECB has previously stated that rates will remain ‘at present or lower’, and any removal of the potential to loosen monetary policy further could perk up markets significantly.”

Joshua Mahony, market analyst at IG, says the City is facing the ‘calm before the storm’, ahead of tonight’s election results.

The polls are open, and despite what is expected to be an incredibly volatile 24 hours ahead, we have seen a remarkably calm start to the day for the FTSE 100...

Amid a remarkable Corbyn resurgence in the polls, FTSE traders would do well to remember the confusion caused around the US election and EU referendum, where the predicted demise of stocks in the eventuality of a Trump win or Brexit really didn’t come to fruition, catching many off-guard.

Ultimately the worst eventuality here would be a hung parliament, given that Brexit negotiations are due to start in just 11 days.

Britain’s stock market is basically becalmed right now, with the FTSE 100 currently down 9 points at 7469.

It has gained around 4.5% since today’s general election was called in mid-April, so traders are now waiting to see if the pollsters have got this one right.

The pound is also failing to provide any excitement, and is currently down 0.1% at $1.2945.

With Britain’s polling stations doing a brisk trade, City experts have been analysing how the results of today’s vote will shift the markets.

Here are some predictions from Mihir Kapadia of Sun Global Investments, who expects Theresa May to be returned with an increased majority.

• · Conservative Win: This is largely expected, however, it is the scale of the victory that matters. If there is a landslide for the Conservatives, the markets will be stable, as they have already priced in for this scenario and thus there is not much leverage for it to rally further. The pound on the other hand will perform well over the news and can well trade over $1.3100. If there is a marginal victory, the markets will await for further clarity on the Brexit prospects and developments. So whichever the outcome in the Tory victory, the markets will be stable.
  
• · Labour Win: This will be a major political upset but is highly unlikely. This could see pressure on the GBP and on Gilts in particular. UK shares may also decline though some sectors will gain on the back of expectations of higher government spending.
  
• · Hung Parliament: This scenario is probably the most difficult for the markets, as it will could lead to a coalition government. This will also weaken the new government’s position in handling the Brexit negotiations, and can be particularly damaging for the pound.

Jeremy Cook of currency firm World First is predicting (or possible hoping for) a relatively quiet night:

Craig Erlam, senior analyst at foreign exchange firm OANDA, says the pound will plunge if the election didn’t provide a clear winner:

From a markets perspective, this election is huge and could produce some substantial moves, particularly in sterling, the FTSE and UK debt. As we’ve learned from similar events previously – Brexit, US election - not only is the outcome not always obvious but the market reaction can also catch people off guard and that’s what’s had traders acting with such caution all week.

The most undesirable outcome is surely a hung parliament that produces both domestic political uncertainty and, more importantly, uncertainty and delays in Brexit negotiations. With the currently deadline being March 2019, any delay will be detrimental to the UK in negotiations and could therefore be devastating for sterling. While the knee jerk reaction to this may also be bad for the FTSE, as we saw after the EU referendum, we could see this bounce back quite quickly with the weaker currency benefiting its mostly outward facing companies.

Britain’s slowdown at the start of this year was due to faltering demand in the services sector, especially among businesses that relied on consumer spending.

That’s a sign that higher inflation, due to the weak pound, is hitting households.

It also highlights the risks posed by Brexit, argues Ben Chu of the Independent.

He writes:

The UK’s slump in GDP growth in the first quarter has been attributed by economists to a sharp slowdown in consumer spending, owing to the spike in inflation that has followed the drop in the pound in the wake of the Brexit vote last June.

The UK’s GDP growth rate is expected to pick up slightly in the next quarter, but most analysts believe that leaving the EU will set back the economy, with the damage depending on the nature and scope of future trade arrangements with the EU, our biggest trade partner.

Some economists warn that a failure to secure any form of deal - a “cliff-edge” Brexit in 2019 - could cost the economy up to 9 per cent of GDP, relative to otherwise, by 2030.

The UK has been growing more strongly than the rest of the EU for most of the past seven years but that partly reflects stronger population growth in the UK.

The pound has shed its early gains, following the news that Britain was the slowest-growing member of the EU in the last quarter.

Sterling is now hovering around $1.295, falling away from this morning’s two-week high.

Some early reaction to today’s European growth figures:

We’ve learned over the years that it’s wise to treat opinion polls with caution, which is why traders are rather nervous today.

Jasslyn Yeo, JP Morgan market strategist, says that younger voters (who typically have a lower turnout than older ones) could catch the City out.

“Markets appear to be pricing in a Conservative Party majority victory.

“However, we still see much uncertainty surrounding the UK election, where a higher turnout vote of young people could potentially turn the tables on investors.”

Last week, YouGov showed the scale of the generational split in UK politics:

Here’s another chart showing how the markets might react to the UK election result:

There will be drama in the markets if Theresa May doesn’t manage to increase her majority today (she currently has a working majority of just 17).

Marc Ostwald of ADM Investor Services reckons 40 is the magic number to avoid internal Tory party strife.

Barring a surprise the key question is how large the Conservative majority might be, with anything below 40 seats likely to embolden the ever restive elements, whose penchant for internecine warfare is well documented, to embark on a fresh leadership challenge, given the incompetence of the party’s campaign.

Ostwald also pints out that the next UK government faces a very tough job:

Even if a substantially larger majority is achieved, there is little doubt that it will make not a iota of difference to the EU’s stance on Brexit negotiations, though it will heighten the risk that both sides continue to talk AT, rather than TO each other, and end in a complete breakdown. There is also little doubt that the UK economy is now facing some significant headwinds, above all consumers that are facing higher inflation, weak wage growth and the pressures associated with a far too rapid pace of credit growth, the more so given an increasingly soggy housing market, above all in the populous south east.

City analysts believe the pound will rise over $1.30 if Theresa May increases her majority (which was the whole reason for calling the election).

But a hung parliament could send sterling plunging by over six cents - a really sizeable move.

Bloomberg has crunched forecasts from several investment banks:

Connor Campbell of SpreadEx agrees that sterling is getting a small lift from the general election:

As Britain heads to the ballot box the markets got off to a relatively quiet start this Thursday, with the pound very gently building on yesterday’s gains.

Cable – which, despite some big swings, has been climbing since the beginning of June – rose another 0.2%, sending sterling to a its best price in a fortnight. Against the euro the pound has been less successful of late; nevertheless, despite being a long way from recovering the losses it has incurred since mid-May, a 0.1% increase has nudged the currency to a one and a half week peak. The pound is assumedly benefiting from the final round of polls, all of which – to varying degrees – point to a Tory win.