Sterling hampered by political uncertainty

Growing concern over the UK’s political situation is taking its toll on the pound. Together with the inevitable check-back as traders book profits from its sharp rally over the last ten days, the resignation of several senior politicians this week has rocked investor confidence. The latest, work and pensions secretary James Purnell, who quit last night, is the first to openly call for Prime Minister Gordon Brown to stand aside. The results from yesterday’s local and European elections are expected to be very poor from Labour’s point of view. If they are, this will only exacerbate the situation. Political uncertainty is rarely good for the local currency as it almost always gives investors jitters about investing in the UK before the situation is resolved.