By Lea Pachta

As sterling moves higher on better than expected Consumer Price Index data – a welcome change from the falls seen recently on the back of renewed fears over a hung Parliament – a worst case scenario for the pound is looking less likely, according to a City expert.

Mark O’Sullivan, director of dealing at leading foreign exchange firm Currencies Direct, said: “Sterling’s rally over the CPI data, as well as opinion polls showing the Conservatives again moving ahead, may well help to allay the financial markets’ concerns about the pound’s prospects.

“The markets were unhappy with the prospect of a hung Parliament, but today is the last day to register to vote, which means the apparent surge in Liberal Democrat popularity may have come too late. The Conservatives’ stronger poll showing means worries over a hung Parliament are fading.

“A good proportion of those who may have liked what they saw in Mr Clegg’s performance in last week’s Leaders’ Debate, may not even be registered. This could well play into the hands of the two main parties.

“The nightmare scenario being envisaged for sterling was a Liberal Democrat—Labour coalition government, with even a Conservative-Liberal Democrat alliance likely to bring the pound under pressure.

“But without a late boost to voter registrations the impact of ‘Cleggmania’ seems likely to be negligible, a further positive for sterling as it would push the idea of a hung Parliament to the back of investors’ minds.”

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