More pain for the pound under BOTH Boris Johnson AND Jeremy Corbyn

News


30 Jul, 2019

More pain for the pound under BOTH Boris Johnson AND Jeremy Corbyn
 
The pummelled pound is going to continue to be battered either way in the short to medium-term under Boris Johnson or Jeremy Corbyn, says the CEO of one of the world’s leading financial advisory organisations.
 
Nigel Green, the founder and chief executive is speaking out after sterling dropped more than 4 per cent on Tuesday in its worst month since October 2016 on an increasing probability of the UK leaving the EU on 31 in a no-deal Brexit.
 
Mr Green comments: “The British pound is now the second-worst performing currency in the entire world.
 
“There is no end in sight to the embattled British pound’s plight with both the current Prime Minister Boris Johnson and the leader of the official opposition Labour Leader Jeremy Corbyn promoting policies that will deliver fresh – and serious - blows to the currency.”
 
He continues: “Mr Johnson is ramping up no-deal preparations and it looks increasingly likely the UK crashes out of the EU in a no-deal scenario in October.  Even though this has largely been priced-in by the markets, there can be no doubt that it has also intensified uncertainty and, in response, the already weak pound fell and continues to flounder.
 
“We can expect this to continue as the Johnsons administration takes brinkmanship with the EU to a higher level, the closer we get to the Brexit deadline.
 
“Should the UK leave with no-deal, the pound can be expected to remain weak for several years until the country and the bloc readjusts.”
 
Mr Green goes on to add: “In addition, many observers predict that there will be a general election before the end of the year. All by itself this too will create uncertainty and therefore turbulence for sterling.
 
“But should a Corbyn-led Labour party win that election, there will be even more bad news for the pound.
 
“His anti-business rhetoric, and high tax and low-profit policies would lead to considerable and sustained selling of the pound.”
 
Last month, Nigel Green noted: “During the past two years, the pound has been battered when it comes to its price against other currencies.
 
“The significant drop in the value of the pound has contributed to reducing people’s purchasing power and a drop in UK living standards. Weaker sterling means imports are more expensive, with rising prices being passed on to consumers.
 
“The fall in the pound is good for exports some claim, but it must be remembered that around 50 per cent of UK exports rely on imported components. These will become more expensive as the pound falls in value.
 
“A low pound is, of course, bad news for British holidaymakers and travellers abroad - with trips to Europe and the U.S. increasingly expensive.  Even destinations such as Dubai and China are more expensive as their currencies are pegged to the U.S. dollar.
 
“Arguably, the key issue for the UK, however, is that one of its biggest and most important sectors, financial services, will suffer from another knock to the pound. It will be hit because it is built on foreign investment that puts its faith in a strong pound.”
 
The deVere Group CEO concludes: “Whatever happens now, the already battered British pound is set for more punishment under either Johnson or Corbyn.
 
“As such, we can expect to see a surge in domestic and international investors in UK assets considering the international options available to them in order to build and safeguard their wealth.”