The UK’s decision to leave the EU in June was met with great shock for many, not least investors who had their money comfortably placed on the view that Brexit was never actually going to materialise. Of course, it did, and I watched the following morning Sterling plummet off the edge of a cliff into a pit of unimaginable uncertainty.
It wasn’t so much the Brexit vote that shocked me, yes the bookmakers and the markets shrugged off the odds. Just minutes before the announcement Sterling was trading at 1.31, a rate seen only a handful of times over the last decade, a sign that the UK economy was in one of its best positions since the financial crisis.
And what could be said for the government at the time, sending pro-EU leaflets through our doors and warnings of wars if the UK didn’t play along. A message that became so desperate by the end of the campaign despite the obviously misleading promises from the leave campaign.
And then of course, the doom and gloom warnings that the UK will be back of the queue for trade deals, recessions, a small island cut off from the rest of the world…
The UK voted to leave the EU well before David Cameron and Barack Obama made attempts to change the minds of millions of voters, and the government at the time made no preparations for doing so. The vote, whilst arguable “mandate”, prompted no further discussions on the matter. It’s equally arguable that those that voted to leave the EU did not have enough knowledge of the potential pitfalls of doing so. But whatever the actual answer is, possibly a mixture of different views, government provided no balanced view on the subject. Instead people took to social media to find any piece of information that supported their view.
The UK economy is booming, and Sterling is about to fall to its lowest level against the US Dollar and Euro, and there’s no amount of positive economic data that will save its fate, because Brexit means absolutely nothing to anyone who wants to invest in the UK.
With the triggering of Article 50 by March 2017, the UK is entering a new wave of uncertainty. The difference now of course, is that the UK is looking to opt a hard stance on EU-UK relations. Closed borders, a return of British ‘sovereignty’, a country which defines its own rules and regulations.
In a world of globalisation, the UK cannot afford to define its own rules and regulations, because the UK is the financial hub of the world and relies on open border regulations to benefit its biggest industry.
But Theresa May has made it clear that the people have spoken and a new direction for the UK will take place, with or without the banks’ approval.
Trading Sterling for now will not follow the traditional path of analyzing economic trends. The value of the Pound will rise and fall based on further news of what and when Brexit is. And with that in mind, expect further downfalls.