How Have Financial Markets Reacted to the Election?

Most commentators have predicted sterling weakness, yet even as a more supposedly business/market 'unfriendly' government appears increasingly likely, the pound has rallied

Andy Brunner 27 April, 2015 | 9:43AM
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Despite it being long, hard fought and gruelling – for protagonists and public alike, perhaps one of the most interesting aspects of this general election campaign is that even as we enter the final stretch, in terms of the likely outcome not a lot has changed. Utilising odds from bookmakers rather than the polls which normally a better predictor, a hung parliament (1/9) is effectively guaranteed, i.e. no party wins an overall majority.

One surprise is the absence of any late incumbent swing and, while the Conservatives are still expected to gain the most seats (1/2) but not a majority (8/1), there is likely to be insufficient support for the Conservatives to form a minority government (4/1).  Indeed, in recent days odds have swung towards Mr. Miliband becoming the next PM (8/11) and a Labour minority the next government (7/4).

With the apparent failure, so far, of the Conservatives to produce any shift in voting intentions, many pundits now expect a Labour minority government with ad-hoc Liberal Democrat and SNP support.

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About Author

Andy Brunner

Andy Brunner  is Head of Investment Strategy, Morningstar UK