One week on and we are still no closer to making sense of Brexit. A week of political unrest, break ups, resignations and now Boris Johnson who led the Leave campaign has stepped down from taking leadership. Whats next for the UK?
It has been exactly a week since we saw the UK unexpectedly leave the EU. Many of us are fazed with the same question, what next for the UK? In the aftermath of the ‘brexit’, we have seen the pound gain ever so slightly this week as investors clutch at the straws that we are not definitely leaving the EU. However, fears of the UK falling into recession have weighed on the pound’s value.
This week has also seen turmoil politically, David Cameron has announced his resignation, and called for fellow ‘bremain’ campaigner Jeremy Corbyn to do the same.
Yesterday Boris Johnson announced that he will not be standing as a candidate to succeed David Cameron as the leader of the conservative party. Whilst Michael Gove publicised his decision to stand as one of the 5 candidates alongside front-runner Theresa May, who is currently favourite to take the position.
Although the political future of the country is in doubt, one thing is certain, the pound will come under further pressure in the build up to the election. Political instability is one of the key drivers for market volatility.
Yesterday, Bank of England Governor Mark Carney hinted that a possible rate cut from 0.5% is on the cards. Additionally, Carney stated that the BoE will use any and every tool to combat the black cloud of the Brexit. Although there was an initial drop in the value of Sterling down to 1.19, the market remained fairly calm as Carney took a positive tone to the effects of the Brexit.
Too add further fuel to the fire, a report by retail economics said that many Brits were now planning on putting large purchases on hold as people prepare for financial turmoil. This was further condemned by the UK current account showing slow growth for the first quarter of 2016 from fears from the Brexit. Time will tell how the UK will fair outside of the EU.
In my opinion, I would be tempted to move sooner rather than later if selling sterling to buy foreign currency. With fears over a recession heating up and the election due to take place in the next 3 months, it is highly likely that the pound will come under further pressure in the short term. A rate cute normally sees the currency in question loose value, this is something for clients to consider if they are looking to sell sterling.
Our team here at currencies.co.uk are here to help you. Why not speak to one of our team here today to protect yourself from further weakness by looking in today’s rate of exchange with a forward contract.
Dont let the Brexit blues get the best of you, making the best of current rates could be worthwhile with so much volatility ahead. Call us on 01494 725 353 to discuss your currency needs.
The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.
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