After six consecutive weeks of losses for the Pound, it is clear to everyone that investor confidence in the Pound is back to an all-time low. The last time we saw such losses was the last General election which saw Theresa May lose her majority in Parliament.
The reasons for recent losses are similar, ever since PM Theresa May stepped down from her position, we have seen a big sell-off in Sterling across the board. Over the last month, the Pound has dropped by 5%.
It seems that Boris Johnson is set to become the new PM after winning the first round of votes within the Tory party, within the next week we will see another round of votes which will most likely solidify his position.
Boris Johnson’s statement this week has made it very clear that he is looking to leave the EU in October with or without a deal, which has now made a no deal Brexit a likely scenario again- hence the weakness in the Pound. As I stated in a previous article, I do not think it will be so simple, I do believe that a general election may have to happen soon as the opposition will argue that Boris Johnson has not been publically elected- which could potentially extend the timeline beyond October, no matter how bullish Boris Johnson is, let’s not forget that Theresa May said exactly the same things when she first became PM.
Many major banks have now downgraded their forecasts for the Pound (Even without a no deal Brexit) due to the fact that UK data is expected to start softening and the Bank of England will not be raising interest rates anytime soon. These downgrades could, of course, get worse if the UK does leave the EU without a deal, but for now, it seems there is not much positivity on the horizon for the Pound.
If you have any currency purchases planned between now and the end of 2019, please contact me for a free review of your situation to see if there are any strategies that can be put in place to hedge yourself against any of the above events and their effects.