Pound falls (again)

1 March 2010

Yet again, the pound is on the precipice. The sterling has now dipped below USD 1.50. This time around, this is due to the increasing likelihood of a hung parliament after the upcoming general election in the UK. The gap in the polls between the Conservatives and Labour has narrowed recently, and a stable majority for the Tories is looking less likely. A hung parliament will mean a minority government, or a coalition government after negotiation.

The pound is one of the vulnerable currencies, and a sudden and huge drop may happen, but it’s not a certainty. There have been many occasions in the past two years when the death of the pound was predicted, and it hasn’t happened yet. It will take place one day. But until that happens, newspapers and news programmes will continue to paint the bleakest possible scenario.