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Why is the UK attracting investment speculators?

Suggestions at the weekend that the UK could attract a raft of speculators after the election on Thursday are causing significant concern within government. However, there is some confusion as to why speculators may well be targeting the UK and what is in it for them.

The simple fact is that confusion, in the event of a hung parliament, is exactly what speculators feed on and they are likely to attempt to sell down sterling in the hope of buying it back at a lower level. In what could become a self-fulfilling prophecy, pressure on sterling is likely to attract more speculators which could put more pressure on sterling and attract even more speculators. The very fact that the currency and bond markets have agreed to open up at 1 AM on Friday morning, immediately after the polls close, is feeding the fire of the speculators.

It is unlikely that the UK will be the only economy to come under pressure in the short to medium term with credit rating agencies said to be hovering over the likes of Spain, Portugal and Ireland not to mention potentially the UK after the election. Whatever happens on Thursday we are certainly in for a rocky ride in the UK!

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