By Daniel Hunter

Businesses could face rising costs as the sterling becomes increasingly volatile ahead of the general election, according to foreign exchange experts FAIRFX.

FAIRFX said that businesses planning to make international payments and transfers in the next six weeks may be in for a shock.

Analysis of the 2010 election and the 2014 Scottish referendum has highlighted the impact major political events combined with an uncertain outcome can have on sterling.

In 2010, the sterling fell from its peak of 1.5407 against the US dollar three weeks before the general election to 1.4422 two weeks after.

FAIRFX currency expert Darren Kilner said: “A further example is last year’s Scottish Referendum where again currency was severely impacted. When the polls signaled that it was possible for a YES vote to come out on top, Sterling began to lose ground to the Euro with rates varying over 3% within a short period of time, however it also quickly rebounded after the vote was a NO.

“With the election just around the corner and the Conservatives and Labour currently on similar levels in the polls, there are expectations of another hung parliament which has every likelihood of creating currency volatility similar to the previous election.

“For businesses, it’s vital to keep a close eye on currency movements so you don’t get stung by an unstable pound."