Boris Johnson’s Brexit plans mean short-term gain, long-term pain for the pound

Boris Johnson

The British pound and UK financial assets will surge on a Boris Johnson victory – but the relief for the Brexit-ravaged UK currency will be short-lived, warns the CEO of one of the world’s largest independent financial advisory organizations.

The warning from Nigel Green, founder and chief executive of deVere Group, comes as sterling hits its highest level since April as Mr Johnson’s Conservatives hold polling leads ahead of Thursday’s general election.

In early Monday trading, the pound was recently up 0.25 per cent on the U.S. dollar, reaching a high of $1.318. It jumped by a similar margin against the euro, with one pound buying 1.1902.

Mr Green notes: “The bounce in the pound is caused by the increasing certainty of a Conservative majority being delivered by Thursday election. 

“Should Mr Johnson be returned as PM, the pound can be expected to reach $1.35.

“A hung parliament would intensify current uncertainty – due to there being the possibility of another EU referendum and another Scottish independence referendum.

“The uncertainty would not only weigh on the pound but it would continue to dampen business investment which, of course, will drag on economic growth.”

However, the deVere CEO’s message does come with a warning.

“The pound’s relief rally will be short-lived.  In the medium to long-term Boris Johnson’s Brexit agenda could come back to deliver another bloody nose to the currency,” he says.

“The serious work of negotiating a trade deal only begins on January 31.  There is then only 11 months to achieve this. It will be a race against the clock. Should this mammoth and complex deal not be struck before the December 2020 deadline, the UK will be forced into adopting unfavourable World Trade Organization terms.”

He continues: “This uncertainty will be a large dark cloud looming over the pound throughout 2020, dampening any bounce.

“And should Mr Johnson ultimately fail to meet the tight deadline, the pound, UK financial assets and economic growth will be seriously impacted.”

Mr Green concludes: “Boris Johnson’s approach is likely to produce short-term gain but long-term pain for the pound.

“Investors can help shield themselves from the risks of market uncertainty and position themselves to capitalise on the opportunities through exposure to a broad range of assets, currencies and geographic regions.”



Latest


16 Feb 2021
Transition management services partnership announced

Standard Bank has signed a memorandum of understanding (MoU) with Chicago-headquartered financial services company Northern Trust, to partner on the…

Transition management services partnership announced

Standard Bank has signed a memorandum of understanding (MoU) with Chicago-headquartered financial services company Northern Trust, to partner on the delivery of transition management services across Southern Africa. Under the partnership, Standard Bank’s clients will gain access to Northern Trust’s full suite of transition management services. Transition Management is a…

16 Feb 2021
Tax free wealth creation with property funds

By Liliane Barnard, CEO and Portfolio Manager at Metope Investment Managers, and Aimee Glisson, Director: Operations, Performance & Risk at…

Tax free wealth creation with property funds

By Liliane Barnard, CEO and Portfolio Manager at Metope Investment Managers, and Aimee Glisson, Director: Operations, Performance & Risk at Metope Investment Managers The tax year, along with the deadline for an investor’s maximum R36 000 annual tax-free savings account contribution, comes to an end on the 28 February 2021. Investors…

16 Feb 2021
Why multi-manager investing is popular

Multi-management has been around for over two decades. This investment management approach is popular among many investors because it promises…

Why multi-manager investing is popular

Multi-management has been around for over two decades. This investment management approach is popular among many investors because it promises to deliver smoother, more consistent investment returns, despite cyclical turbulence of financial markets. Given last year’s drastic swings in financial markets and continued uncertainty on how the Covid pandemic will…

16 Feb 2021
Momentum Health Solutions unpacks COVID-19 vaccine roll-out plan

Momentum Health Solutions announced its COVID-19 vaccine roll-out strategy and how it intends to support both its members, as well…

Momentum Health Solutions unpacks COVID-19 vaccine roll-out plan

Momentum Health Solutions announced its COVID-19 vaccine roll-out strategy and how it intends to support both its members, as well as the uncovered population, in being vaccinated. As the COVID-19 virus continues to spread, a third wave is imminent, should the vaccination rollout not commence soon. Speaking at a recent…


Top stories


10 Sep 2020
How too much choice is draining your brain

By: Paul Nixon, head of technical marketing and behavioural finance at Momentum Investments From the words of Francis Scott Key…

How too much choice is draining your brain

By: Paul Nixon, head of technical marketing and behavioural finance at Momentum Investments From the words of Francis Scott Key that dubbed America “The land of the free”, which stuck, to the unforgettable Mel Gibson monologue where an army of painted Scots were willing to trade their lives for the…

13 Apr 2020
Investors should keep a reasonable investment allocation outside of SA

MoneyMarketing asked Roland Gräbe, the head of Tailored Fund Portfolios at Old Mutual Wealth, about offshore investments in the COVID-19…

Investors should keep a reasonable investment allocation outside of SA

MoneyMarketing asked Roland Gräbe, the head of Tailored Fund Portfolios at Old Mutual Wealth, about offshore investments in the COVID-19 environment and what form a global market recovery will take.

13 Apr 2020
SA’s Proposed Covid-19 Disaster Management Tax Relief

The National Treasury recently issued the draft Disaster Management Tax Relief Bill (Bill) for public comment by 15 April. The…

SA’s Proposed Covid-19 Disaster Management Tax Relief

The National Treasury recently issued the draft Disaster Management Tax Relief Bill (Bill) for public comment by 15 April. The draft Bill, together with its explanatory memorandum, provides clarity with regards the tax relief measures President Cyril Ramaphosa announced on 23 March.

10 Apr 2020
When the going gets tough, farmers are on familiar territory

South African farmers are old hands at adapting to uncertain and daunting circumstances, and our local agricultural industry has proved…

When the going gets tough, farmers are on familiar territory

South African farmers are old hands at adapting to uncertain and daunting circumstances, and our local agricultural industry has proved to be most enterprising in acclimatising to challenges as they arise.


Visit the official COVID-19 government website to stay informed: sacoronavirus.co.za