Well that was a month! And as far as the UK referendum is concerned, not the outcome many expected. The initial impact was felt around the globe as our European neighbours and economies worldwide woke up to the news that the UK population had set the country on the rocky path to separation from the European Union.
Financial markets suffered immediate losses and the value of the Pound plummeted to 31-year lows against the United States Dollar. Of more immediate importance to many UK nationals living and working in Europe was the dive in the Pound / Euro exchange rate from 1.31 on the eve of the vote to the low 1.16’s over the following few days as the ensuing uncertainty sunk in.
Resignations from key political figures followed like falling dominoes. Speculation of how things may pan out, not just in the UK but also within the European Union itself was rife. And one thing the financial markets do not like is uncertainty. This is what leads to volatility between the major currencies. So where are things headed now?
Firstly, as we go to print, the UK has a new Prime Minister, and that in itself has injected a degree of certainty into the markets, with a corresponding recovery of the Pound / Euro rate to around 1.20 and the Pound / US Dollar to 1.32 – a long way off the 1.49 level immediately before the referendum though. Further economic and political announcements are imminent, however, in the UK, USA and the Eurozone, and this will once again cause swings between the currency pairs.
But will we see a return in the near future to pre-Brexit levels? It’s extremely unlikely for quite a while, so we have to expect a bumpy ride in the meantime. There is an upside for many people though. The weakness in Sterling is good news for those wishing to buy goods and services in the UK – great for those buying property and boats – and of course for businesses importing products from “Poundland”! For every loser, there is of course a winner. Either way, we at Premier FX can help you ride the rollercoaster. For an informal discussion on how we can help you make the most of your international money movements, please feel free to contact us at any time.
Nick Jones – Managing Director
