With the UK electorate primed to head to the polls on Thursday, recent polling data has shown that the possibility of a hung parliament, where no party secures enough seats to form a one-party government, could be on the cards.

While Boris Johnson’s Conservatives are still the favourites to win a majority, the chances of such an outcome, according to analysis from Markets.com, are likely to hinge on a small number of key swing seats.

READ: What the UK election result could mean for companies and markets

Investors who turn political junkies for the night might want to watch Workington, Bury South, Clywd South, West Bromwich East and West Bromwich West, all of which the Tories need to win if they are expected to have a comfortable majority.

Should the Conservatives fall short of the mark, there are some scenarios traders should take note of in order to secure their cash in the face of more political ambiguity.

Both sterling and equities likely to fall

No matter where investors choose to park their funds, renewed uncertainty in the UK is likely to cause declines across the board according to many economists and analysts.

“A hung parliament would probably be the worst outcome for the economy in the near-term”, said Capital Economics, adding that negotiations between parties over forming the next government could also increase the risk of a no-deal Brexit at the end of January.

Additionally, if neither Johnson or Labour’s Jeremy Corbyn are able to form a government, British voters could be heading to the ballot box again next year, raising the prospect of yet another extension to the UK’s Brexit date.

Sterling will fall from its recent highs of over US$1.31 to between US$1.20-1.25 against the dollar in the wake of any non-Tory majority outcome, Capital Economics predicts, while UK equities could drop by over 10%.

It won’t be as bad as this, say analysts at ING, forecasting that in the case of a hung parliament sterling is likely to fall back to around US$1.26.

The unsurprisingly bleak assessment from Berenberg was for “UK-focused equities to pare back recent gains” with sterling down by up to 5% on a trade-weighted basis in the near term, pitching it below $1.25.

The German bank is also expecting to downgrade its near-term economic outlook for the UK as the renewed political uncertainty continues to “damage confidence”.

Be wary of the banks

While a Tory majority is seen by the City as a broadly positive outcome for the UK’s domestic banks, any other scenario is thought likely to provide downward pressure on the sector.

Analysts at JP Morgan, for example, say that a Labour government in coalition with other parties, one potential outcome in a hung parliament, could “create uncertainty for UK banks” as the party’s proposals such as the creation of a National Investment Bank and a Post Office-based branch network will add “competitive pricing pressure” to SME-focused lenders such as Metro Bank PLC (LON:MTRO).

Investors looking for short-term upside, JPM highlight that a Labour-led coalition is likely to lead to more weakness in the pound, which could benefit more internationally focused banks such as HSBC Holdings PLC (LON:HSBA) and Standard Chartered PLC (LON:STAN).

Indeed, a weaker pound is a boon for much of the FTSE 100, due to heavy weighting of predominantly overseas earners.

Mid-caps more vulnerable than blue-chips

Looking down a division, as the FTSE 250 has a stronger proportion of UK-focused businesses than its blue chip sibling, the UK’s mid-cap index is likely to be more vulnerable to any political instability arising from a hung parliament, so might be best avoided if a majority government seems unlikely on Friday morning.

Neil Wilson of Markets.com says that “instability at Westminster would benefit the FTSE 100 and hit domestic equities on the [FTSE 250] harder”.

A Tory majority could actually cause problems for the blue-chips if the pound surges on the back of the result, potentially dropping back below 7,000 points to levels not seen since the start of the year, Wilson said.

Property market volatile, but sector could resist the worst of it

Another sector likely to be turbulent in the wake of a hung parliament is the UK’s property markets, with more uncertainty expected to raise buyer caution and slow house price growth.

“A hung parliament is possibly the worst outcome where the UK property market is concerned and would plunge us back into a political Groundhog Day of uncertainty and Brexit delays. In doing so, buyers, sellers and housebuilders would no doubt remain sat on the fence and the sluggish rate of house price growth seen over the last year, in particular, would persist”, said Michael Stone, founder and chief executive of Stone Real Estate.

However, Stone says that activity levels in the sector have remained high despite the “negative political market shenanigans”, a trend he expected to “continue regardless of the outcome [of the election] as people refuse to keep their finger on the pause button and want to continue to move on with their property purchases and life in general”.

Analysts at Shore Capital, however, say that with both Tory and Labour manifestos appearing committed to ending austerity, “in our view, a clear result in favour of either should be positive for construction activity and medium-term earnings growth across most of the sector”.

However, they caution that in equity markets it is “often better to travel than arrive” and after the recent rally in share prices across the sector this may have priced-in the good news.

“A Tory win might provide one last, modest fillip on the morning after, but we look to turn negative whatever the outcome,” ShoreCap said.