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May 10, 2010    

Pound gains on dollar despite hung parliament

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by Kay Murchie

Despite Friday’s general election result, which failed to give any political party a clear majority, sterling has gained on the US dollar today, while London’s FTSE recovered from the sharp falls on Friday.

The pound rose by nearly a cent against the dollar to $1.4865 but fell against the euro to 1.1510 euros.

The pound fell sharply against the dollar last Thursday (the day of the general election) and following the result on Friday.

Furthermore, the FTSE 100 lost 2.6% on Friday after its worst week for 18 months but recovered its losses and rose 3.4% in early trading today.

Markets have also been boosted today after EU nations agreed a £433 billion rescue package for crisis-hit euro zone nations.

Asian markets also reacted strongly to the rescue deal with Japan’s Nikkei 225 up 1.4% at 10,509.93 - just shy of the high of 10,535.86, while Australia’s S&P/ASX 200 gained 1.9% at 4,564.9 - again just short of a high of 4,577.9.

South Korea’s Kospi Composite increased 1.6% and Hong Kong’s Hang Seng Index rose 1.3%.

However, today’s main concern in the UK is the political uncertainty. A hung parliament could seriously hurt the UK’s economic recovery.

According to many experts, the hung parliament result means it will be harder to pass legislation and undermine a fragile UK recovery.

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