The FTSE 100 hit a one month low in morning trading today as election uncertainty hit the market.

The British stock market was down 1.65% to 6,819.51 as investors cooled activity amid the prospect of a hung parliament and the closest election in decades.

Stocks that fell included Morrisons, which today said that sales were down in the first quarter. However, the FTSE 100 remains up about 5% in the year to date.

Sterling also took a hit, with the pound falling against both the dollar and the euro.

Jane Foley, senior currency strategist at Rabobank, said: "We expect the pound to remain on the defence versus the euro in the coming sessions failing any signs that a Conservative-Lib Dem coalition government could again command a majority."

The opinion polls point to no overall majority for either the Conservatives or Labour. Even if the Conservatives are able to form a majority government, further volatility could be in store after David Cameron promised a referendum on Britain's membership of the European Union by the end of 2017 in the event of a Conservative victory.

Negotiations after the results are announced could be pivotal, according to Foley.

"During the five days of coalition negotiations after the last general election sterling held its ground fairly well, making slight gains versus the euro and the dollar. The fact that there were signs that a workable two party government could be formed may have been lending support to the pound. Also supportive of sterling back in May 2010 was the improving tone of UK economic data which, in the event, did not sustain," she added.