Latest Pound update: the Pound is now just 1.7% down against the Euro, recovering from the 2.3% low of 8am this morning.
At 10pm last night, as soon as the Exit Poll was released, the Pound dropped by 2% on the markets fears of a hung parliament. That started alarm bells ringing but as the Asian markets opened at around mid night things has stablised and the Pound recovered slightly. By 7am the Pound is 1.49% down on yesterday. This is to be honest a tiny loss compared to what we saw in the second half of 2016.
When the markets opened here in the UK the Pound fell 2.3%.
Charlie Murray of FC Exchange stated: ‘The market had largely expected a Conservative majority which would have had a positive impact on the pound. However, in the event of a hung parliament sterling was likely to decline. This is a delicate time for Britain amid Brexit, and markets shy away from political instability. At its lowest point post-election, the pound sank to 1.2634 versus the US dollar (GBP/USD), and 1.1286 against the euro (GBP/EUR).’
The only result that the markets really didn’t want was a Labour lead coalition and it soon became obvious that that was not going to be the outcome.
The hard Brexit was also very unpopular with business and the markets. There is now no mandate for a hard Brexit. Pundits are even calling this election ‘Revenge of the Remainers’. Brexit is not derailed and will go ahead. What has been deflected is the ‘Bloody Difficult Woman’ approach to negotiation.
So what is going to happen?
I expect nothing to happen officially until the beginning of next week. A Conservative government propped up by the DUP will give her a working majority.
So from a travel money point of view, should you rush to buy your money now before the Pound collapses?
I would say ‘No’. Wait until the hung parliament is resolved. Theresa May has to go to the Palace this morning and explain her plans to form a government to the Queen. She then has the weekend to put those plans into action.
The Scottish National Party have seen big losses over night and that really has made the idea of a second independence referendum very remove indeed. Many are saying IndyRef2 is dead. This is music to the markets ears. They never wanted to see the UK split up. Every time Scotland moves towards independence Wales looks a little step closer to the same decision. This knock back to independence will dampen those thoughts.
Wait Until Monday
Nothing really important is going to happen until Monday so whatever those plans are; the markets will be happier once they know what to expect. Everyone is expecting a toned down version of business as usual.
So the it seems to be a case of ‘Don’t Panic‘.