- Sterling hits 168-year low
- Market jitters to continue following Parliamentary discussions
- Unilever-Tesco dispute likely a result of Cheaper Pound
- Government remain split on Brexit strategy
Sterling hit a period of intense volatility during Parliamentary discussions yesterday. Both Labour and Conservative MP’s through their weight at the Brexit topic which offered little confidence to Pound investors.
Whilst there is some optimism following Theresa May’s announcement that Brexit talks will be carefully vetted amongst MP’s, the UK is no closer to understanding what it plans to achieve from Brexit. And with the odds stacked against them, there are reasons to believe that Sterling has a long way to go before improvements materialise.
Upon invocation of Article 50 which is likely to occur early next year, the remaining 27 members of the EU will have full control over what deal the UK receives. They are likely to protect their own interests which could dampen UK expectations for a positive EU exit.
Are consumers beginning to experience the impact of Brexit?
Unilever are the first supplier to come forward regarding higher costs as a result of a weaker Pound. The dispute which currently exists with Tesco only, could be the first in line for suppliers to offset prices to consumers.
This could in turn, fuel a drop in consumer spending which could spill into the economy, prompting the Bank of England to act again by cutting interest rates.
And with Government still split over a Brexit strategy, there is very little that could support Sterling and it may be a matter of time before economic conditions go from bad to worse. GBP EUR exchange rates could hit 1:1 by Christmas.