GBP/USD sinks to 1-year low as U.K. awakes to hung parliament

ForexNewsNow | Published on May 7, 2010 at 3:46 am

NEW YORK (Forex News Now) – The pound sank to a one-year low on Friday as Britons awoke to the first hung parliament since 1974, after the opposition Conservative party won most of the seats, but failed to secure an overall majority.

In European morning currency trading, GBP/USD struck 1.4475, the pair’s lowest since April 23 last year. The currency pair later slithered back up to 1.4576 – down a huge 1.74% on the day.

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Earlier, the election results sparked massive uncertainty, as traders worried about how long it would take the political parties to form a government, and whether that government would be strong enough to tackle Britain’s gaping budget deficit.

The election results overshadowed Greece’s debt crisis, becoming the day’s spotlight FX news event.

In light of the current FX info, sterling is likely to touch support against the greenback around the low of March 11, 2009, 1.3653, and encounter resistance around Wednesday’s high, 1.5147.

Monday’s FX news is likely to be dominated by a further developments in the aftermath of the U.K. election, and a key decision by the Bank of England on its benchmark interest rate.

 

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