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The pound survives first 100 days of the Coalition

Thursday 19th August 2010

When the General Election on May 6th brought in a hung parliament and sterling fell on the result, many predicted the currency would have a bumpy ride for the rest of the year.
When the results of the May General Election were finally confirmed and it was clear that no one party had an overall working majority, GBP/EUR plummeted 4% from 1.1845 to 1.1350 and GBP/USD fell 3% from 1.4935 to 1.4475 in just one day (7th May).

However, the resulting 100 days has shown that predicted “Sterling Crisis” didn’t happen, according to data from foreign currency exchange specialists, HiFX

Since David Cameron became Prime Minister 100 days ago, GBP/EUR has risen 7% to 1.22 and GBP/USD has also rebounded 8% to 1.5630 since May 7th 2010.   Sterling reached a 19-month high in June against the Euro reaching 1.2394 and a 6-month high against the Dollar at 1.6002 in August.

 "There are always two sides to any story, particularly in the currency markets, and how much of this recovery is down to Cameron is always a topic of debate,” said Andrew Scott, currency dealer at HiFX.

“However, despite concerns over the UK economy's growth rate when the coalition government was elected and CEBR forecast that the pound and Euro could hit parity, sentiment towards Sterling has improved as pressure mounts on other currencies.

“With the new government appearing to be holding together well, along with budget cuts initially protecting the Pound's credit rating, it seems that investors have started to look at the UK differently.

“This positive news for Sterling, set against the backdrop of continued Euro downgrades and fears of a double dip US recession, has put the Pound into the limelight as a potential safe haven currency.”

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Editorial Contact Details - Conor Shilling
conor.shilling@angelsmedia.co.uk
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