Political uncertainty and Brexit keeping the pound on its toes

Following yesterdays calls for Theresa May to sack both her International Trade secretary and Foreign Secretary over failings in their conduct, the pound slumped back into the 1.12’s against the Euro and the 1.30’s against the US dollar.

With the Conservative government already rather fragile this political uncertainty looks to further undermine Theresa May’s authority and ability to govern.

Political uncertainty can have a major impact on the value of a currency. The uncertainty surrounding the current government will be making investors wary of the stability within the UK’s economy and hence the stability of the pound. For this reason investors tend to move money into other currencies, the resulting sell-off de-values sterling and other currencies become more expensive to buy. A move we are currently experiencing.

With this current political instability, combined with the on-going Brexit negotiations, I fear the pound is likely to remain under pressure in the short to medium term. For this reason it may be worth considering the use of a forward contract to safeguard your exchange rate.

Simply a forward contract allows clients to fix an exchange rate in advance, even if you do not have full availability of funds. For a nominal deposit we can fix and guarantee a rate for up to two years in advance, taking all of the uncertainty out of this volatile market.

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