Sterling falls as hung parliament beckons

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.

The FT’s Money blog is a forum for the latest news and insights from the UK’s personal finance scene. Matthew Vincent, the editor of FT Money and his team of reporters will upload their views and insights on what’s happening in the industry and how this affects people’s finances.

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Lucy Warwick-Ching is the FT’s new Money Online Editor and has been a UK Companies reporter covering tobacco, pubs and leisure companies as well as the deputy editor on House and Home.

Matthew Vincent is the FT’s Personal Finance Editor and was previously the editor of Investors Chronicle, where he also devised the award-winning online video The Market Programme, and produced the BBC-FT standalone magazine ‘How to be Better Off’. He presents the weekly FT Money Show audio podcast, and previously worked on the BBC TV programmes Short Change and Pound for Pound.

Alice Ross is deputy personal finance editor of FT Money. She specialises in pensions, investments and investment trusts. Alice joined FT Money in April 2008 - prior to that she was deputy editor at Money Management magazine.

Ellen Kelleher has been a personal finance reporter in the UK for close to four years. Before arriving in London, she worked in the FT's New York bureau where she covered the insurance sector.

Steve Lodge is a personal finance reporter on FT Money specialising in savings.

Josephine Cumbo has written about all aspects of personal finance but currently specialises in insurance. She also covered company news for Prior to working at the FT she was a news reporter for the ABC.

Tanya Powley is a personal finance reporter on FT Money specialising in mortgages and the housing market. Tanya joined FT Money in November 2009 after working in Australia covering personal finance for the Australian Financial Review and its sister magazine Asset. Prior to that, Tanya wrote about mortgages for UK trade newspaper Money Marketing.

Jonathan Eley is editor of Investors Chronicle, and has been with the title for ten years. Before that he worked for newswires and trade journals in London, New York and Hong Kong.