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Brexit: A Catalyst, Not a Cause

In the post-Brexit soul-searching that has gone on over the past three weeks or so, there is no doubt that sterling has had a starring role to play.  For many, the pound’s dramatic fall is cited as proof that Brexit was a disastrous mistake on the part of the British voters, for which they will pay a high economic price.  Others dismiss such claims as fear-mongering on the part of sore losers – currencies go up and down all the time (in fact, last week saw the pound put in its biggest one-week rally since 2009) and trying to claim that a weaker pound somehow proves that Brexit is bad for the UK’s economic prospects is naïve at best, and disingenuous at worst.


The reality is that both claims contain elements of truth.  The fall in sterling does signal economic turbulence ahead for the UK economy, and it represents a judgement...

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Like the presenters of the BBC’s Springwatch, the nation is sitting out in the proverbial cold eagerly awaiting signs of life in the political landscape.   At the end of last week Teresa May and Andrea Leadsom emerged as the Prime Ministerial candidates, with May having a significant majority of MP support.  The next step looked to be the September 9th conservative party membership vote, however after the backlash from Leadsom’s ‘motherhood’ comments, she has withdrawn from the race.  This leaves May with a clear run to the PM-ship and will see David Cameron step down sooner than planned on Wednesday evening.  The acceleration of the handover schedule is a welcome relief to the power gap currently pervading Westminster.  Sterling rallied 100bps this morning on the news of Leadsom’s withdrawal, signifying the markets’ yearning for political stability. 


Focus will now shift to Teresa May’s Brexit Strategy.  She has talked a harder line...

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Updated Currency Forecasts

In this week’s report, we take a look at our updated forecasts for our four main currency pairs post Britain’s decision to leave the European Union and discuss the key factors that we expect to influence the currency markets in the months ahead.




Sterling’s fall, particularly against the dollar, has been well documented by the mainstream press over the past week. The pound fell from a high of $1.50 to $1.31 within two working days post the result. Most analysts (ourselves included) expected a fall of 10 – 15% in the unlikely scenario that Britain voted to leave and, so far, these forecasts have been spot on.


The big question going forward, is what happens to sterling from here? Unsurprisingly, all the contributors to the Bloomberg poll who have submitted forecasts since 27th June have revised their estimates for the currency significantly lower. The vast majority have plumped for a forecast between...

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