(Reuters) - Sterling jumped 1% versus the dollar on Monday
"The Tories will be heaving a sigh of relief as it reduces at the margin the prospect of a hung parliament," said Neil Mellor, FX strategist at BNY Mellon.
In a significant boost for Prime Minister Boris Johnson ahead of the Dec. 12 election, Farage said he did not want anti-Brexit parties to win, so was standing down candidates.
Sterling touched a high of $1.2896 though later eased off that level to stand some 0.8% higher around $1.2884. It rose as high as 85.62 pence
British government bond prices fell as Farage spoke and were down about 30 ticks from before the announcement.
(Reporting by Elizabeth Howcroft and Bill Schomberg; editing by Sujata Rao)