Hung parliament would delay Sterling’s recovery

Tuesday, April 27, 2010

Hung parliament would delay Sterling’s recovery

The Pound's recovery against major foreign currencies such as the Euro and the US Dollar would be slower under a hung parliament, which is bad news for Brits seeking to buy a property abroad, according to a leading currency expert.

Sterling has continued to come under pressure in the last few weeks, amid growing fears that a hung parliament is the most likely outcome at next month's general election. This is not good news for British people looking to buy a home abroad, as a weak exchange rate adds to the cost of buying an overseas property.

Finance experts are concerned that a hung parliament may be unable to effectively address the UK national debt and credibly curb government expenditure.

Alastair Constance of foreign exchange broker Ethical Currency told aplaceinthesun.com: “The very real possibility of a hung parliament is a major factor applying downward pressure on Sterling, because it would be trickier for Parliament to instantly put through fresh legislation that could properly tackle the economic deficit in the UK.”

That said, the Shadow Business Secretary Kenneth Clarke's claim that that a hung parliament would be “a tragedy”, with dire consequences for the value of the Pound, appear to have been sorely exaggerated, due to growing signs that Sterling will eventually improve later this year.

Constance adds: “There is no doubting the fact that any political party that gets an outright majority would be better equipped to reduce the economic deficit and improve Sterling's value.

“However, even a coalition government should be able to tackle the national debt, once the dust has settled after the election. This in turn should see Sterling's value improve against the Euro and US Dollar later this year. It would probably just take a little bit longer to happen.”

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A Place In The Sun