Bank of England Governor gave a stark warning to the UK suggesting that the UK’s growth could fall by as much as 8% in the immediate aftermath of Brexit should there be no transition period. In what many felt was simply “scaremongering” Mr Carney’s comments were certainly very worrying and highlighted the potential damage to the UK of a no-deal Brexit, a scenario that has a real chance of happening.
He went on to suggest that large parts f the UK economy are not ready for a no-deal Brexit and suggested that the housing market could fall by as much as 30% and the pound by 25%. In response hard “Brexiteers” such as Conservative MP Jacob Rees-Mogg accused Mark Carney of talking down the pound, saying the Bank of England’s warnings “lack all credibility”. Mr Rees-Mogg said “project fear” had become “project hysteria”.
Could the pound really fall by 25%?
It was quite a damning and worrying insight from the central bank, and a potential reality check for many. Mr Carney was quick to deny that the Bank’s warning of a no-deal could lead to a UK recession was intended to scare people into backing his favoured form of Brexit, although the forecasting was very concerning.
It highlights what a shambles this whole process has been and the fact, as I alluded to in my previous post, that we need to avoid a no-deal at all cost. With the 11th December the next key date, this being when parliament will vote on Theresa May’s Brexit bill, those looking to buy or sell currency in the coming weeks would be well advised to take stock of your position. Is it worth taking the risk of a Brexit no-deal? I personally believe some form of agreement will be reached, or an extension of the divorce deadline will be agreed. I cannot see how a scenario of a no-deal Brexit can be allowed, surely a poor deal is better than no-deal? Either way the pound could face catastrophic losses should the unthinkable happen.
Can I protect my currency?
Yes. One of the most commonly traded contract types available is a forward contract. Simply this allows clients to fix and secure an exchange rate without the full availability of funds. As long as you have a deposit (typically 10%) we can fix and secure your exchange rate up to two years in advance. With the next few weeks set to be extremely volatile, and the prospect of the pound falling sharply if Theresa May’s bill is not passed and a suitable alternative found, then the use of a forward contract could save you thousands. For more information on this contract and the full service we can offer then please get in touch here