Published by Mark Smith-HalvorsenSterling registered its biggest intra-day fall against the dollar for more than a year during trading yesterday (March 2nd), with traders alarmed by the prospect of a Labour victory in the upcoming election.With both Labour and the Conservatives struggling to present a clean party image to the public, the Tory victory that once seemed assured has been called into question, with many traders now fearing a hung parliament.Such a scenario could spell disaster for UK recovery as cross-party wrangling creates policy stalemates which undermine a strong response to the rising public deficit, the weak pound and other problems.The Telegraph reports that while this issue has been brought to the fore with the publication of the latest voting polls at the weekend, forex risk management teams have been wary of the prospect of a hung parliament for some time.While Gordon Brown has struggled to shake off allegations of bullying, the Tory party image has this week been tarnished by the announcement that Lord Ashcroft has saved millions of pounds in tax responsibilities by claiming non-domicile status.For more information on foreign exchange treasury services and risk management, visit our Corporate FX site