The uncertainty has forced the pound to slide against a strengthening euro and a host of other major world currencies.
Laura Parsons, currency analyst at TorFX, said: “The pound had a bit of a miserable Monday, falling by over 0.7 per cent against the euro to touch a low of €1.1276 – its worst rate since last November.
“Concerns about the viability of the Conservatives forming a minority government with the backing of the DUP kept sterling under intense pressure and the currency also recorded notable losses against the US dollar, Australian dollar and Canadian dollar.”
The hung parliament has also intensified concerns about the decreasing likelihood of a hard Brexit.
Top credit ratings agency Moody’s echoed these fears in a statement released yesterday.
Ms Parsons said: “As well as referencing the negative impact the election result could have on the UK’s public finances, Moody’s stated that the result would ‘complicate and probably delay Brexit negotiations’.”
Economic data out of the UK today is unlikely to have a significant impact on boosting the exchange rate as it normally would.
Ms Parsons explained: “While today’s UK inflation figures would ordinarily have an impact on GBP/EUR exchange rate movement, the UK’s uncertain political climate is likely to override the latest consumer price news.
“Germany’s ZEW current situation and economic sentiment surveys may lend the euro support however if they show the improvement forecast by economists.”
The euro has been gathering strength on the back of an update from the European Central Bank (ECB) last week.
ECB president ECB, Mario Draghi said the “risks to the growth outlook are now balanced”, hinting at the possible rollback of the quantitive easing programme and the tightening of interest rates.
The exchange rate has even dipped below parity at some airports throughout the UK.
