Neil Davies, Head of Trading at PlutusFX, takes a look at Sterling:
Tonight’s live TV debate will see seven of the UKs political leaders line up in what has been touted as a visible symbolic demonstration of the death of two-party politics. Whether the recent fall in Sterling will continue may well be influenced by the outcome of tonight’s show and will no doubt continue until some certainty returns to the governance of the UK.
Just a month ago GBP/USD sat at 1.54, but has since dropped back to now sit at 1.482, despite a rally on Tuesday which saw Q4 2014 GDP figures revised upwards to growth of 0.6%.
With the likelihood of a hung parliament, the smart money may be on further weakness. Last time round the announcement of a hung parliament saw around a 3% drop for the pound, though clearly this time round there must be some account for the expected result to be priced in.
Interesting that tonight, in a ‘random draw’ as to where the Party leaders will stand, David Cameron will be positioned on the right and will also have the last word.