AN ASYMMETRIC RISK TO STERLING DUE TO THE ELECTIONS?

The political landscape has not changed much since campaigning for the 7th May UK General elections started nearly a month ago. One-on-one interviews of Prime Minister David Cameron and opposition leader Ed Miliband, two televised debates featuring the main party leaders and the launch of the party manifestos have yielded much noise but ultimately shed little light on how and by whom the country will be governed in the next five years.

On current form, Labour and in particularly the Conservatives will struggle to shape a two-party coalition with a working majority (323 seats), let alone govern single-handedly. This opens up the prospect of a minority government, an unprecedented three-party coalition or a two-party coalition having to seek support from at least one other party on key votes. The UK Election Predictor, which I devised in March, is arguably still as relevant today in analysing how seats numbers are likely to translate into actual government configurations.

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