The pound to drop to US$1.20 if election delivers hung parliament
The pound might fall to 1.20 against the US dollar if the UK delivers a hung parliament, deVere Group has said.
The prediction from founder and chief executive of deVere Group’s Nigel Green followed new polling that indicated that the majority of polls tracking the UK election suggesting growing support for Labour.
“The surge for Labour in the recent polls, which raises the spectre of another hung parliament, has been reflected by the dip in the pound against the dollar, the euro and other major currencies,” he said.
“Sterling fell 0.2% to $1.29 on Monday with the odds on a hung parliament being delivered next week narrowed to as low as 7/4 - down from 9/4 last week.”
According to Green, such a scenario would further intensify uncertainty into 2021, since uncertainly is never welcomed by financial markets and might cause the pound dip on the news of Labour closing in on the Conservatives ahead of Brexit election.
“The uncertainty would also serve to continue to dampen business investment which, of course, will drag on economic growth,” Green warned.
“A low pound is also bad news for British expats who get a UK pension or UK income – plus it’s bad for holidaymakers and travellers abroad – with trips to Europe and the US becoming increasingly more expensive. Even destinations such as Dubai and China are more expensive as their currencies are pegged to the US dollar.
“Should Mr Johnson’s Conservatives win the election, the pound and UK financial assets stand to gain with immediate effect.”
AUTHOR
Oksana Patron
Recommended for you
Statutory NPAT at Pacific Current has almost halved in FY25 to $58.2 million as the result of an investment restructure.
Being able to provide certainty about redemptions is worth fund managers pursuing when targeting the retail market even if it means sacrificing returns, according to Federation Asset Management.
Regal chief investment officer Philip King will step down from listed investment company VGI Partners Global Investments after the LIC reported a loss of $17.6 million for FY25.
Real asset commentators have shared what advisers should be considering when conducting their due diligence on the assets and how they can mitigate illiquidity for retail clients.
