Published by Jamie JemmesonThe warnings that the pound will tumble catastrophically in the event of a hung parliament are overblown, according to UBS.Speaking to the Telegraph, Mansoor Mohi-uddin, managing director of foreign exchange at the bank, said that while falls may be witnessed in the days following the election, the currency will soon stabilise, as the coalition's mandate will be firmly pegged to reducing the deficit."The new government is likely to pass a summer Budget showing how it will deal with Britain's public finances. That should calm sterling fears," he said.There has been alarm that Britain may lose its AAA sovereign debt status in the event of a hung parliament, but Mr Mohi-uddin warned that the greater risk would be a party with an outright majority cutting the deficit too quickly.In the last election debate, David Cameron looked to place distance between himself and his two counterparts on issues such as the deficit, and the UBS statement will be taken as a blow to the credibility of plans to begin drastic cuts this year.For more information on foreign exchange treasury services and risk management, visit our Corporate FX site