Pound slides and FTSE 100 rises as UK faces a hung parliament

FT/Roger Blitz, Michael Hunter & Michael Mackenzie/06-09-17

The pound fell more than 2 per cent and prompted a sharp divergence in UK equity prices after the general election result deprived Conservative prime minister Theresa May of a parliamentary majority, plunging the country into political uncertainty less than two weeks before Brexit negotiations start.

…The uncertainty created by the election result ahead of the country starting negotiations with the EU over leaving the trading bloc was primarily being expressed in currency weakness.

“We must consider that a political risk premium will hang over the pound for the foreseeable future,” said Stephen Gallo, a foreign exchange strategist at Bank of Montreal. This will “put a ceiling on the pound”.

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