Next week the new Chancellor Philip Hammond will deliver his Autumn statement on the UK economy following the result of the EU Referendum in June. According to sources he faces a £100bn financial hole over the next 5 years. This is likely to be patched through the use of heavy taxation which could hurt the poorest people.
George Osborne, the previous Chancellor to David Cameron warned of the potential consequences for leaving the EU. and planned to put the UK in surplus by the year 2019-2020. It’s unlikely now that this will be the case which could result in the Pound losing further value.
Strong UK retail sales help boost the Pound
The latest UK retail sales jumped to 14-year highs as consumers continue to shrug off any Brexit woes. Whilst this would appear to be signs of positivity consumer prices have, and will likely continue to rise in the wake of Brexit and the slump in Sterling’s value. It may only be a matter of time until high inflation and stagnant wage growth hurt consumer spending prompting further falls in the Pound’s value.
That being said the UK and thus the Pound is benefiting from external factor. The US elections and Trump’s pro-business stance could help the UK form new trade deals, whilst uncertainty over the European elections next year may result in further surprises. It’s no surprise that the anti-establishment sentiment is increasing in Europe with the likes of Marine La Pen of France building momentum ahead of the French elections.
And given that Brexit may be put on the backburner following the recent Court ruling the Pound could find itself edging higher towards 1.20. In a complete twist of events those looking to buy foreign currency may find themselves in a better position.