Economics weekly by Lloyds TSB

Prospects of a hung parliament have, until recently, weighed on the pound… What impact will the UK Election have on FX and bond markets?

Prospects of a hung parliament have, until recently, weighed on the pound…

With less than a week to go before the General Election, both the pound and UK bond markets appear remarkably unaffected, despite the heightened probability of a hung parliament. In the weeks leading up to the first Prime Ministerial debate, there was quite strong evidence that an increased risk of a ‘hung’ parliament was correlated with a weaker pound. The theory is that a hung parliament is synonymous with weak government, unable to take the vital steps needed to reduce the fiscal deficit after the election.

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