Sterling took a dive in European & NY trading on Fri due to renewed market jitters ahead of the upcoming U.K. election: May 4, 2015

Intra-Day Market Moving News (GBP/USD)
04 May 2015 00:13GMT

Sterling took a dive in European & NY trading on Fri due to renewed market jitters ahead of the upcoming U.K. election.

Reuters reported Britain is heading towards a hung parliament after Thur's national election, fuelling uncertainty about the country's future in the European Union, its economic policy, n Scotland's place in the U.K.
Four days before Britain's closest election in decades, the prospect of no single party winning an overall majority and which alliances could be struck with smaller parties afterwards is dominating debate.

If Cameron is re-elected, he has promised to hold an in-out EU membership referendum in 2017, while the rise of Scottish nationalists - who lost an independence referendum last year - is generating continued uncertainty about Scotland's place in the United Kingdom.

The uncertain outcome of Thursday's election reflects the fact that Scottish nationalists threaten to overrun Labour in an area it once considered a stronghold, n the rise of the anti-European Union UK Independence Party (UKIP) which risks splitting the Conservative vote in its English heartlands.

Labour & the Conservatives are likely to win less than 300 seats each, short of a majority in the 650-seat parliament. The Scottish National Party (SNP) could take over 50, the Liberal Democrats between 20 and 30, n UKIP less than 10.

The 2 main parties are refusing to publicly countenance a second-successive hung parliament, something that would be taken as evidence that their decades-old grip on power has been permanently weakened.

Regardless of who emerges as the largest party, talks to form the next gov't are expected to take longer than the 5 days of negotiations that resulted in the 2010 coalition. More parties are likely to be involved, faced with less clear cut coalition maths to guide them.

Labour's most likely route to power is with the support of the SNP, which eventually wants independence for Scotland, even though both parties have ruled out a formal coalition. Labour has said it does not want an informal deal with the SNP either, but many analysts think it could reconsider after the election.

The Conservatives are most likely to turn to Clegg's centrist Lib Dems to reprise the current government. But that would only be viable if Clegg n Cameron exceeded expectations n won enough seats between them to form a majority. Clegg is also open to a deal with Labour.

As well as challenging the orthodoxy of British politics, the complex array of scenarios that could unfold after May 7 is being closely studied by financial markets, with Labour n the Conservatives offering starkly different plans to manage the finances of the world's fifth-largest economy.

Although there are few signs yet of U.K. stocks, bonds or broader asset markets taking fright at the prospect of hung parliament, currency markets are starting to show some background anxiety.

With the looming U.K. election now only days away, British PM David Cameron's Conservative Party took a one-point lead over the opposition Labour Party, according to a YouGov opinion poll for the Sun newspaper published on Sunday.
The poll showed the Conservatives with 34% versus Labour tallying 33%, polling company YouGov said.

Britons will vote on May 7 in what is expected to be the tightest election in decades. The 2 main parties have been neck-and-neck in most opinion polls since the start of the year, with neither establishing a sustained lead that exceeded the 3-point margin of error.

Opinion polls have shown that neither of the 2 main parties was likely to win an overall majority in the 650-seat Parliament.