For most of the past year the EU’s relationship with Europe has offered three very different, but clear, possibilities: a no deal Brexit, a “soft Brexit” of some description or another referendum (that could easily see Brexit cancelled entirely).
That was all tricky enough to call and the pound duly responded by trading within a fairly narrow margin at the start of the year as no-one felt ready to commit.
The situation changed six weeks ago when Theresa May resigned as Prime Minister. The pound has fallen by over 5% against the euro since then as a Boris Johnson premiership became more likely, especially as he won the early rounds of the contest so easily. Until this weekend you could say that Boris Johnson winning – quite likely followed by a no-deal Brexit – was all but priced in to the value of the pound.
It doesn’t look so obvious now. A weekend of terrible headlines for Boris and clear signs that Jeremy Hunt is willing to “play the man”, while highlighting his own rather dull competence, has made it all less of a coronation and more of a contest. Even for a Conservative Party membership desperate for a saviour, Johnson is looking less Churchillian by the hour. Moreover, the differences between Hunt and Johnson’s attitude to the EU appears to have narrowed, with Hunt saying he would reluctantly leave with no deal if necessary.
And even if Boris does win, the signs are increasingly looking towards either a general election or another referendum as the only ways to get past the mathematics of the British parliament which will still apparently not support any clear line of action. So as well as the three Brexit options we also have to consider who and how many prime ministers we might have in the next 12 months.
What will happen? No-one has any idea whatsoever! That is why today, more than ever, I would urge you to focus on your plans and how much in euros, dollars etc. you need to fulfil your plans.
Then call your trader on 020 7898 0541 to find the right solution to that. Depending on how far ahead you are in your planning, a forward contract that fixes your exchange rate could well be right for you.
