City expert says pound fears over a hung parliament are exaggerated

Date: May 05, 2010

- Main test to sterling will come after the election -

Sterling has been buoyed this morning against the euro as investors shy away from riskier assets, concerned over the sovereign debt crisis in the Eurozone. Despite the risk of a hung parliament outcome in the UK polls tomorrow, there has been little pressure on the pound this morning.

Mark Bolsom, Head of the UK Trading Desk at Travelex, the world’s largest non-bank FX Payments Specialist, said, “There has been a lot of speculation about a hung parliament and that the pound will freefall against most major currencies if it does come to pass.

“Personally, I think this is very unlikely and I don’t think the damage will be as bad as widely feared. Certainly, I’d expect some turbulence against the dollar and euro tomorrow but sovereign debt fears in the Eurozone will help keep the pound stable.

“It is also very likely that the markets have already priced in a hung parliament, as opinion polls have long pointed towards this outcome.

Bolsom comments, “The real test to the pound will come after the election. If a hung parliament does happen and the main parties cannot cooperate to form a credible deficit reduction plan, the pound will suffer. Potentially we could see it fall to 1.15 against the euro and under $1.50 against the US dollar.”

- Ends -

Media enquiries
Jessica Buttress
Head of PR for Travelex Global Business Payments UK
0208 415 4204
077954 497129
Jessica.buttress@travelex.com

About Travelex:
Founded in 1976, Travelex is the world’s largest non-bank foreign exchange and payments specialist; with operations across four continents and 6,000 employees worldwide.

Travelex holds key positions in its three main areas of activity: Global Business Payments (TGBP, which includes Travelex Personal Payments), Currency Services and Card and Mobile Payments. Every year, more than 35,000 corporate clients and 30 million customers trust Travelex to manage their foreign exchange requirements.

Recently recognised by TowerGroup research as Industry Leader for payments innovation for SMEs, Travelex currently handles international payments worth £40 billion annually for over 750 large corporate and financial institutions.

Visit www.travelexbusiness.com/uk for more information or email the press office at jessica.buttress@travelex.com