In a strategy note it says that the only three instances of sharp budget cuts outside of wartime in modern UK times happened in periods of weak majority rule or coalition government.
"Far from creating a decision-making vacuum, coalition governments have historically enabled politicians to internalise political opposition, negating the adverse political consequences of hard decisions, and have strengthened the will and resolve of policymakers in tough times," the bank says.
It is not alone in advocating a tie-up of the three parties. Trustnet Alpha Manager Julian Fosh says other countries, for example Germany, exemplify how well a weak majority can work.
"A hung Parliament is a possibility, and it's not necessarily the disaster many make it out to be. While the UK market might dip short-term on a basic 'Tory-good-Labour-bad' sense, it could be a good thing long-term," says Fosh, who manages the First Opportunities fund, the Intellectual Capital fund and the First Growth fund at Liontrust.
"If you look worldwide, those countries with a weaker majority often run better. While some say it will hit sterling, the currency has actually been weak for some time. It's not the threat of a hung Parliament which will make the difference," he adds.
Performance of Sterling vs Dollar over 5-yrs
Source: Financial Express Analytics
Duncan Higgins senior analyst at foreign exchange specialist Caxton FX disagrees. He says that, while recent eurozone developments have stolen focus from the weakness of the pound, the notion of a hung Parliament has been hanging over sterling in recent months. Such an outcome will lead to a heavy sell off in the UK currency, he says.
"The problem lies in uncertainty. The market has little political bias and simply wants to see a single party gain power. Sterling could come under heavy selling pressure on Friday, should no clear winner emerge, as doubts will remain over the government's ability to finance the deficit," he says.
But, Lombard Odier's view is that a hung parliament would ideally form an independent Fiscal Review Commission to make apolitical recommendations for fiscal correction.
"Such conditions would, in our opinion, be very supportive for sterling," it says.
Broker BGC Partners' senior strategist Howard Wheeldon is hoping for a Conservative win.
"To those that believe a hung Parliament is just what we need now, mostly those significantly younger than me, I say that it is a great pity that you didn't live through 1964 and 1974 – two very different periods that show in different ways why strong government is best," he says.
Another view is that investors should not shake up their portfolios on the back of the election outcome.
"Whatever happens in the election, we know we're heading for change. Investors should stick with a manager who will not wobble, who can see the long-term benefits for the fund after a hung, Tory, Labour or Liberal Democrat government," Andy Parsons, advice team manager at the Share Centre says.