The Pound is paying the price for Theresa May’s failed gamble” – David Lamb

The Pound is paying the price for Theresa May’s failed gamble” – David Lamb

Following the outcome of the General Election 2017, the UK wakes up to the potential of a hung parliament. As the results rattle the city, the pound is left tumbling and falling against other currencies, including a seven-month low against the Euro. The Conservative Party’s inability to maintain a parliamentary majority now adds to the rising political tension, resulting in the Pound to drop back to levels that were last seen following Theresa May’s election decision.

David Lamb, head of dealing at FEXCO Corporate Payments comments, “The Pound is paying the price for Theresa May’s failed gamble – and after a 2% fall overnight it remains deeply vulnerable. The Prime Minister had hoped to begin Britain’s Brexit negotiations this month with a thumping mandate and a spring in her step, instead she will do so walking on egg shells and looking nervously over her shoulder for cabinet members, wielding knives. While it’s possible that the Ultimate Brexit deal could be a touch softer than that promised by Mrs May, for now this remains too theoretical to have much bearing”

Indeed, Brexit will still go ahead, however the “hard” Brexit arrangement favoured by the ardent Brexiteers is no longer in play. What we could be experiencing is a softer version of Brexit, with more visibility of negotiations that will ultimately be positive for investors and is most likely give the Pound a boost in value. On the other hand, the ‘hard’ approach with its controlled borders for free trade, services and products, would be unattractive for investors due to the uncertainty of knowing what their investment would look like in the years to come.

Richard Berry, founder of the currency specialists, Berry FX commented “with Brexit negotiations due to start in little over a week, many in Brussels will be secretly licking their lips at the prospect of Britain’s weakened leader kicking off the process in shame rather than with a swagger. In reality, of course, Brexit negotiations will be put on ice. There are so many variables in play that the Pound could even rise in the days ahead as the likelihood of a soft and more palatable Brexit increases.”

Ultimately the results of the election and the possibility of a “soft” Brexit may prove to strengthen the Sterling in the coming days. The elections relevance to personal finance can be summed up by Bruce Davis, cofounder and MD of Abundance, as he comments “Today’s election result is a wake-up call to anyone who thinks the public’s views can be taken for granted. Whether a political party or a major financial institution, empty soundbites with no substance don’t work anymore – whether claiming strength and leadership where there isn’t any, or advertising savings accounts that pay 0.1% interest. The Brexit referendum taught people that their views do matter, and now more of us are demanding ours are heard and dealt with properly.”

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Categories: Featured, News, Viewpoint

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