Associated Press

The British pound climbed and U.K. equities boomed on Monday in the wake of last week’s election, which kept the Conservative Party in power with a majority.

The British pound GBPUSD, +0.1651% rose to $1.3355 from $1.3329. The currency did rise above $1.35 shortly after Prime Minister Boris Johnson’s party convincingly won the general election, but then lost some of its gains.

The pound is still up 7.5% against the greenback over the past three months.

Traders on Monday preferred large caps to mid caps, but both advanced. The FTSE 100 UKX, +2.41%  jumped 2.5% to 7537.80, while the mid-cap FTSE 250 MCX, +1.81%  gained 1.8% to 21894.90.

Analysts at Bank of America expect the FTSE 100 to reach 7,700 by March. “Domestically exposed U.K. stocks have already outperformed foreign-exposed U.K. stocks by 14% since mid-August — and our macro assumptions imply near-term downside of up to 7%. As a consequence, we remain underweight domestic vs foreign-exposed U.K. stocks, a position we have held since late October,” they told clients.

Between July 23 and Dec. 13, U.K. airlines surged 31%, while U.K. automobile plays fell 46%, according to ratings agency Standard & Poor’s data. More generally, so-called domestic revenue plays rose 17% over that timeframe, while foreign revenue plays fell 5%, according to S&P.

British American Tobacco BATS, +4.33%  was the best FTSE 100 performer on Monday, rising over 4%, as Bank of America upgraded the company to buy from underperform.

Sports Direct SPD, +29.67%  shares surged 29% as the retailer which is changing its name to Frasers Group said its first half underlying pretax profit surged 58% on 14% revenue growth. Excluding acquisitions and currency movements, revenue fell 6.4%. The stock has nearly doubled this year.