Hung parliament worries hit sterling

Date: Monday 01 Mar 2010

Sterling hit a nine and a half month low against the US dollar Monday amid fears that an indecisive election result could delay measures to address the UK’s parlous deficit.

A poll at the weekend showed support for the Conservative party at 37%, with the Labour Party on 35% and the Liberal Democrats on 17%. If emulated in a general election, that would likely result in Labour winning more seats despite their lower share of the vote and forming a minority government.

The pound fell below $1.51 to its lowest level since mid-May last year.

A weak government following this year’s election, which must take place before June 3, may be reluctant to take any measures to deal with the fiscal deficit.

Prudential’s interest in buying troubled US life group AIG’s Asian investments, which sent shares in the UK insurer sharply lower, also weighed on sterling given the outflows the currency would see if the deal goes ahead.

« Go back to news channel

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE