There is a growing chance of political deadlock in Britain after an election that must be held by June, an outcome which would leave no party in overall control, a highly unusual state of affairs in Britain's first-past-the post electoral system.
Sterling fell to a 10-month low against the dollar and gilts fell on Monday after an opinion poll showed an increased chance of an hung parliament, and crucially pointed to Labour rather than the Conservatives becoming the largest party, unlike other recent polls.
By contrast, British stocks proved resilient to such political uncertainty and are expected to remain so, even if the election result further dents the currency and the gilt markets.
"We have plenty of evidence that the UK economy has got absolutely sweet nothing to do with the FTSE," said David Buik, senior partner at BGC Partners, referring to the fact that the blue-chip index rarely moves on domestic data.
Only 39 percent of FTSE 100 companies' revenues comes from sales in the UK, according to a Reuters analysis of half of the FTSE 100 companies that break out the figures.
A weaker pound is actually a benefit for UK investors in the British blue-chip index since overseas sales denominated in foreign currencies become more valuable in sterling terms and as UK exports look cheaper to foreigners.
The pound lost more than 2 percent against the dollar and almost as much in trade-weighted terms alone on Monday alone, with concern cited about what sort of action would be taken to cut the public deficit in the event of a hung parliament.
The FTSE 100's resistance to such concern - the index was even outperforming the wider FTSEurofirst 300 by midsession on Monday - suggests the anxiety is less acute among equity investors.
That's partly because a delay in fiscal cuts would mean breathing space for some defense companies and infrastructure firms which rely on government contracts.
Engineers like WS Atkins and Invensys which derive a lot of business from government departments like transport would typically be vulnerable to sharp cuts in government spending.
Companies involved in major manufacturing projects for the defense industry like British Aerospace and Rolls Royce would also be under threat if a new government were to cut spending sharply.
"It's more of a negative for the fixed income and currencies in the longer term because in the absence of significant fiscal tightening at home it prevents a more dramatic slowdown in domestic demand than might otherwise occur," said Peter Dixon, economist at Commerzbank.
Others think that once markets get over the initial shock of an unfamiliar political setup, they might find that being forced to share power might make it easier for politicians to get things done. This could lead investors to rethink their overbearish stance on gilts and the pound as well as being a net positive for stocks.
"In terms of a hung parliament, it's an unusual or scary thing for the UK to contemplate," said Lars Kreckel, equity strategist at Exane BNP Paribas. "It's not like coalition governments get no work done. In some cases they get more done." It might make it easier for policymakers to make unpopular decisions, if they know they can spread the responsibility.
"What both parties are terrified of is not doing what's best for the country, for being castigated for seeing unemployment going up and for being politically incredibly unpopular," said Buik at BGC Partners.
"Whereas if the balance of power is split, there is a chance that good sense will prevail and that this situation has to be faced."
