Fears over a hung UK Parliament have been overblown, according to Nomura analysts, who predict a workable Conservative majority – a result that could make "sterling-denominated assets the strongest performer" in the second quarter of the year.

In a report published by Nomura yesterday, Alastair Newton, the bank's senior political analyst, said that despite the recent shift in opinion polls, the 2010 general election, set to take place on May 6, will most likely result in a working majority for the Conservative party, triggering a sterling and gilt market rally.