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Pound falls amid fears of hung parliament

YouGov poll showing Tories with just 2-point lead prompts biggest single drop in sterling since Janu

The pound has fallen to a 9 month low amid fears that the upcoming election will result in a hung parliament, delaying action on Britain's budget deficit.

During a hectic day of trading, sterling fell 1.7 per cent, dropping below the $1.50 level against the dollar for the first time since May. Sterling has lost 7 per cent against the dollar this year.

City experts expect the pound to suffer from further jitters on the foreign exchanges, perhaps reaching the low of $1.40 against the dollar which was hit early last year, and becoming equal against the euro.

This latest decline was triggered by a weekend opinion poll by YouGov for the Sunday Times, showing that the Conservative lead over Labour had narrowed to just two points, the lowest in two years.

If repeated at a general election, this would give Labour 317 sears, nine short of an overall majority, with the Tories behind then with 263 seats.
Investors are concerned that in the event of a hung parliament, where it is harder to pass legislation, the budget deficit would not be reduced and tentative economic recover would be harmed.

This was the largest single fall in the pound since January last year.