The value of sterling has nosedived after reports suggested that no main political party had been able to establish a sufficient majority in the election.
The pound hit a 12 month low against the dollar (falling as low as $1.4597) and fell 3 per cent against the euro to 1.1547. But why has it fallen so far?
Mark Bolsom, Head of the UK Trading Desk at Travelex Global Business Payments says that investors believe that ‘a hung parliament will paralyse the formation of a credible deficit reduction plan’ and that this ’concern has manifested itself in the fall of sterling this morning, as they seek refuge in traditionally safe haven currencies’.
He echoes many in the markets when he says that it is crucial to our economic recovery that the main parties agree on a credible plan – indecision will threaten our credit rating and undermine the pound.
To keep up with what’s happening visit our General Election 2010 indepth page.