The pound is going to continue to fall in the short to medium-term under Boris Johnson or Jeremy Corbyn, argued deVere Group founder and CEO Nigel Green.
The comments come after sterling dropped more than 4 per cent on Tuesday in its worst month since October 2016, as the probability that the UK will leave the bloc without a deal on 31 October increases.
“The British pound is now the second-worst performing currency in the entire world,” Green said. “There is no end in sight to the embattled British pound’s plight with both the current Prime Minister Boris Johnson and the leader of the official opposition Labour Leader Jeremy Corbyn promoting policies that will deliver fresh – and serious - blows to the currency.”
With Prime Minister Boris Johnson ramping up no-deal preparations, Brexit uncertainty has intensified, and, in response, the pound has fallen and “continues to flounder”, despite a hard Brexit being priced-in by the markets.
Alongside Johnson’s preparations, Green noted that many observers have predicted a general election before the end of the year, therefore creating further uncertainty and turbulence for the pound.
“Should a Corbyn-led Labour party win that election, there will be even more bad news for the pound,” the deVere CEO claimed.
Furthermore, yesterday, the pound fell 1.3 per cent against the dollar to buy $1.221, falling through the $1.23 barrier for the first time since March 2018. It also slumped 1.5 per cent against the euro to €1.096, after sterling was worth €1.12 less than a week ago.
In the event the UK leave the EU without a deal, the pound can be expected to remain weak for several years until the country and the bloc readjusts, Green stated.
He concluded: “Whatever happens now, the already battered British pound is set for more punishment under either Johnson or Corbyn.
“As such, we can expect to see a surge in domestic and international investors in UK assets considering the international options available to them in order to build and safeguard their wealth.”
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