The markets react

The Markets have had a roller coaster trip today in reaction to a Hung Parliament. Gordon Brown's announcement that he had asked the civil service "to provide support on request" to parties in talks over forming a Government triggered a fresh sterling sell-off amid worries over political paralysis. The statement sent the pound below 1.45 dollars and 1.14 euro, but it recovered some ground minutes later as Liberal Democrat leader Nick Clegg said the party with the most votes and seats - the Conservatives - should have the first right to seek to govern. Fears over delays in tackling the UK's yawning deficit have punished sterling in a turbulent day as markets fear a Lib-Lab coalition in a hung Parliament. At one stage the pound fell more than 2% against the dollar to its lowest level since April 2009, while strong recent gains against the euro to above 1.18 were undone at a stroke as the pound slipped as low as 1.136.

Currency traders warned the political uncertainty sparked by an indecisive election result was likely to mean more volatility for sterling in the days ahead.

London's FTSE 100 Index also came under early pressure - it shed 100 points to hit a three-month low as trading began - although it recouped some losses later.

The pound's weakness and official figures showing factory gate prices rising at the fastest rate for 18 months also prompted concern over the return of inflation - leading to possible interest rate hikes from the Bank of England and jeopardising a fragile recovery.

The Bank's Monetary Policy Committee (MPC) is meeting today to make its latest policy decision, which will be announced on Monday.

The committee's inflation benchmark, the Consumer Prices Index, is well above the 2% target at 3.4% although it is currently forecasted to fall back below the target later this year.

It will be with intense interest that the world watches to see what will happen next. Undoubtedly, a strong united government is the best way for any country to move forward as it rears its head from a deep dark recession.