The British pound sterling, the U.K.’s basic unit of currency like the U.S. dollar, took a sharp plunge on the markets after the June 8 election.
Exit polls show that Conservatives might not hold control in Parliament.
The financial markets don’t like not knowing who will be in charge. ETX Capital Senior Analyst Neil Wilson called it a “knee-jerk reaction.”
While the initial drop was a short-term reaction, the long term also holds uncertainties.
Britain faces Brexit negotiations with the EU. These negotiations are key to UK financial health.
“The risk is that if we have a coalition or we have a minority government we just don’t have that stability at home to take on Brexit,” Neil Wilson explained.