Concerns about a hung parliament hover over sterling
Yesterday we saw the revelation that the latest poll amongst voters in the UK indicates that the Conservative lead over the Labour party is now down to 2 points. While this poll should not be taken in isolation, with other polls showing a significantly larger lead, there are growing concerns that we could have a hung parliament after the next election. What would this mean for the UK economy?
There is no doubt that a hung parliament is the worst-case scenario for UK investment markets as this would place shackles upon any coalition government requiring the support of additional parties. Whether it is Gordon Brown or David Cameron at the head of a coalition government they would be unable to push through all of their own economic policies and economic goals.
However, there is a feeling that the Labour Party has made much headway by placing themselves as underdogs in the next election and this tightening of the Conservative lead could blow away that strategy. This would then pit the Conservatives against Labour on the economy, immigration, taxes and other prominent issues in the minds of UK voters.
This uncertainty has unsettled the currency markets and the pound is now under pressure and likely to remain so if the recent poll proves to be a turning point in the election campaign.
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