Well, we said to expect the unexpected, and the election did not disappoint in that respect!
Sterling fell by approximately two percent at around 10pm yesterday evening, as the exit polls shone the first spotlight on the uncertainty to follow. The election result has raised further uncertainty on a number of key issues: not just about who will make up the new parliament, but what’s next for Brexit? This will undoubtedly continue to cause volatility in the markets and will dampen Sterling strength for the foreseeable… Markets do not care for uncertainty, and the resulting volatility poses numerous risks: to the economy, to UK businesses, and ultimately, people’s pockets.
Sterling likely to struggle?
At the time of writing, Sterling is around the USD 1.27 mark and EUR hovering around 1.13, having recovered slightly after the initial significant drop upon the first election poll. In contrast, the FTSE 100 rose 66 points to 7,516, despite fears it would open lower on the hung parliament outcome. We will likely see more market movement across the board, as investors seek refuge in the relative safe haven of the US Dollar.
What next for the economy?
All eyes will be on who goes into parliament and how Brexit will be navigated in the face of an unprecedented governmental set up.
Carolyn Fairbairn, Director General of the CBI, called for UK politicians to focus their attention on the economy: “Politicians must act responsibly, putting the interests of the country first and showing the world that the UK remains a safe destination for business. It’s time to put the economy back to the top of the agenda.”
“For the next Government, the need and opportunity to deliver an open, competitive and fair post-Brexit economy that works for everyone across all our nations and regions has never been more important.”
Mike Cherry, National Chairman of the Federation of Self Employed and Small Businesses (FSB), pointed out that it’s not all about Brexit, calling for politicians to “take action on surging business costs”, a very real threat to UK business that we have been monitoring and warning businesses to protect themselves against since cost pressures began to spiral in early 2017. With market uncertainty, this could become an even more significant risk that has to be both planned for and guarded against.
Watch this space for more news and reaction – and what it means for you…
If you would like to chat through the implications for you or your business, get in touch with your currency consultant, or give us a call today.
We’ve been monitoring the markets since opening this morning and can guide you through the movements and how to navigate the uncertainty ahead.
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