What’s the impact of latest Brexit developments on investment and currency markets?

What’s the impact of latest Brexit developments on investment and currency markets?


So ever since the 2016 referendum the
pound has been really sensitive to Brexit developments the last week has really
proven that point. Back on Tuesday last week the pound was trading at about 109
against the euro and 119 against the dollar but since then it’s risen about
two cents against the euro to 111 and about four cents on the dollar to 123. Much of that is down to the prospect of a no deal brexit becoming less likely. No
deal is really something that the pound doesn’t like the prospect of. I think the key thing to bear in mind
for investors is that the falling pound isn’t necessarily bad news the
biggest example of that would be UK companies, large UK companies, who are
making a lot of their revenue in international spaces. Because in
sterling terms that means that those those revenues, once they’re converted
back into pounds, have actually risen on that basis.The other good news to that
side of the story is that these companies tend to be things like big oil
and gas majors and these tend to be, you know, the bigger companies in say the
FTSE 100 / FTSE 250 and that means that when they’re doing well they actually
prop up the rest of the of the index which is why even though sterling has
fallen we’re actually seeing a rise in the UK stock market. So there’s no getting away from the fact
that companies that are relying on the UK for their revenues and profits are
finding things a little bit more difficult. The best way to think about
that is it’s more of an import problem so thinking specifically about say
supermarkets who have had to go internationally to buy a lot of those
products if they’re then coming back and having to put those products on UK
shelves at a weaker UK price, you know, that can really squeeze revenues and
therefore margins if they’re choosing not to put their prices up to match Well as developments come thick and fast a lot could happen between now and the 31st of October it’s really tough to
make a call on where the pounds going to go from now. It will largely depend on
further political developments and any comments that come as a result of it. So, for example, if we do get a general election what are the policies of the
main parties are going to be campaigning on Exchange rates are going to move around
even when Brexit’s said and done, you know, that’s not going to be a solid thing. The key message for investors and what we would say is to make sure that
they diversify their portfolio that means not being under or over exposed to
different types of companies and that means still owning some UK companies. We’re not saying to turn your back on UK-centric businesses the most important
thing is that investors are diversified Well if you’re looking to transfer money
abroad there are a couple of options you could consider. If you worry about
currency volatility many currency specialists will actually let you fix an
exchange rate for up to two years ahead and so regardless of what happens in
the currency markets it will help you to fix your costs. On the other hand if
you’re looking to capture exchange rates as they move you could consider a rate
alert or a market order you

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