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WHAT IMPACT WILL THE ELECTION HAVE ON STERLING AND GILTS?

TREVOR WILLIAMS | LLOYDS TSB
"On average, the pound tends to strengthen after general elections, regardless of the size of the majority. As it fell about four per cent in the past quarter, history suggests we could see a short-term recovery. For gilts and swaps, there could be short-term volatility if there is political uncertainty after the election."

PETER DIXON | COMMERZBANK
"Hiking taxes and cutting spending will cut the rate of returns for international investors and may result in a slowdown in portfolio inflows. They have been mostly positive since 2000, which has helped sterling. This is not to say the pound is set to collapse but it is difficult to paint a scenario of strong near-term gains."

MICHAEL SAUNDERS | CITIGROUP
"In the UK, there is no real consensus over how and when to tighten fiscal policy, and there is little or no appetite among the electorate for fiscal pain. The UK’s first-past-the-post system means that coalitions tend to be relatively unstable. If there is a hung parliament, we suspect gilts and sterling will be vulnerable."