Category Archives: Post-Brexit

brexit household income

Why Brexit Has Impacted On Household Income

At first glance, it might seem unlikely that Brexit, that most political of events motivated by highly political reasons, would impact at all on household income in the UK. This would only seem to be true at the first glance, though, because of course events of great political significance are bound to have a knock-on economic effect. Brexit has had many consequences, but among the most immediate were a decline in the value of sterling, a rise in inflation and a reduced amount of investment and productivity. The combination of these factors has, according to report produced by the National Institute of Economic and Social Research, has been that household income throughout the UK has fallen by £600, or $795. These effects are, the report continues, likely to be felt disproportionately by the poorer among the UK’s population, with the unemployed, the elderly and single-parent household being especially hard hit.

The gloomy nature of this report and its predictions for the consequence of Brexit on household income is not disputed generally, though there has been some disagreement about what the longer-term implications might be. Some analysts have predicted that the most important, long-term effects will be on inflation and also wages, and it was a concern for these matters that caused the Bank of England to announce its first-rate hike in ten tears. A result of this hike was to cause sterling to fall even further, and also to cause a surge on the London Stock Exchange, which closed one point short of it best ever finish again hopes for stronger exports brought about by the weakness of the pound. This was especially true for companies which make their profits largely in dollars or euros, such as large mining concerns. We can see here the possibly divergent outcomes for Brexit on household income in the longer term. Will high-interest rates continue to eat away at incomes? Or will a surge in exports fuel some manner of recovery?

We should also note, while we are considering these matters, that not even the Bank of England itself is certain of the consequences of Brexit. Some of its Monetary Policy committees argued that the rate hike was unnecessary since other factors would bring a natural end to the inflationary pressures affecting the economy, and, by extension, household income. They pointed to a slow-down in Gross Domestic Product and investment and also on high street spending sunk to levels that matched those from the depths of the recession. If these minority opinions in the Bank of England are correct then household income will continue to be adversely affected by the inflation that was caused by the weakness in sterling, which occurred in the aftermath of Brexit. In conclusion, it seems that we can be sure of only one thing; whether we see a continuing slowdown or a recovery furled at least in part by exports, the decision of the UK to leave the European Union will affect the amount of money coming into all British households.

Spread betting, CFD trading and Forex are leveraged. This means they can result in losses exceeding your original deposit. Ensure you understand the risks, seek independent financial advice if necessary.

The value of shares and the income from them may go down as well as up. Nothing on this website constitutes a solicitation or recommendation to enter into any security or investment

Markets uncertain as UK sends mixed messages before Brexit

Markets Uncertain As UK Sends Mixed Messages Before Brexit

The week ending the 16th June saw the markets displaying uncertainty about the GDP/USD pair with consecutive Doji candles on the 14th and 15th with a significant degree of through-flow only highlighting this lack of assuredness of the part of investors. This is understandable, as uncertainty seemed to be the underlying theme of the events which underpinned economic developments during the week in question. Indeed not only the UK but also the USA seemed to be sending out mixed messages, with the respective Central Banks sounding hawkish noises as the political news indicated only increasing levels of uncertainty, doubt and general indecision. The markets’ uncertainty seemed a reasonable reaction in the face of this medley of mixed messages.

The position of the UK seemed clear at first glance, but a second and a third revealed deeper and more baffling trends. The government of the UK was and is facing the Brexit negotiations, due to commence on the 19th June in a weakened condition following the decision to call a snap election. If Prime Minister May hoped to strengthen her majority and gain a clear mandate to negotiate Britain’s withdrawal from the European Union then she scored a political home goal of epic proportions. In the aftermath of the election, she was left with no overall majority and forced to scramble to negotiate a Supply and Confidence arrangement with the DUP of Northern Ireland if she was to be able to govern at all. As the DUP is a confirmed Euro-Sceptic party then this might seem to indicate that the UK might attempt to negotiate a hard Brexit, a move most British businesses earnestly seek to avoid. In light of this surely the future of the GBP can be predicted.

Or can it? The fact is that the DUP is Euro sceptic in principle; it was the most sceptical of all British political parties before the rise of UKIP. However, it must be remembered that the DUP is a party of Northern Ireland and thus wants to maintain as open a border as possible; the preferred phrase in use is ‘frictionless’. This is very much in accord with the sort of Brexit that British businesses are hoping for, and it is entirely possible that a soft Brexit was one of the conditions insisted upon by the DUP before they entered into any coalition deal.

In light of this consideration we have the UK facing a stern seeming EU set on ensuring that the matter of British obligations are honoured before any trade negotiations be considered, with a British government that may be committed to achieving a free trade, minimal customs, the continuing recognition of pre-existing standards and rules and the maintenance of universal access to goods and services. In light of this, is it any wonder if the market is unsure of what will eventually transpire?

Spread betting, CFD trading and Forex are leveraged. This means they can result in losses exceeding your original deposit. Ensure you understand the risks, seek independent financial advice if necessary. The value of shares and the income from them may go down as well as up. Nothing on this website constitutes a solicitation or recommendation to enter into any security or investment.

GBP to suffer after political home goal

GBP To Suffer After Political Home Goal

The aftermath of the UIK’s controversial 2017 General Election seemed to come into focus towards the end of last week after a period of uncertainty. This came as yet another blow to the new government of Theresa May already left reeling by losing its majority in the British Parliament and having to form a minority administration in combination with the Democratic Unionist Party of Northern Ireland. Initially, following the immediate dismay in the wake of the comparatively poor performance of the sitting government, Sterling seemed to rally as hopes grew for a Soft Brexit. This was paradoxically a result of the involvement of the DUP in the new administration. The paradox here is that, until the rise of UKIP, the DUP were seen as the most Euro-Sceptic of all the larger British political parties. However it is always important to note that the DUP is a party of Northern Ireland, and Northern Ireland relies on its close trading links with the Republic of Ireland. The DUP is therefore very definitely in favour of the frictionless border with the Republic and no observers could see how a Hard Brexit could be negotiated or realised if such an open border existed between part of the UK and part of the EU. The prospective reality of this eased fears somewhat as the start of the Brexit negotiations loomed. Sterling also recovered against the dollar in the wake of softer than expected US economic announcements and also because of the USA government’s own political troubles.

However, these tentative signs that all was not as grim as it looked for the pound in the immediate future were soon offset by cold, hard realities revealed by eh EU’s demeanour and announcements, and also by hawkish behaviour from Euro currencies. The European Union remained firm in its commitment to a policy of refusing to consider future trading negotiations until the finality of Britain’s exit was hammered out at the conference table, these details including the small matter of financial obligations on the UK’s part amounting to €100 billion. Perhaps not surprisingly the chart for the Euro and Sterling indicated a risk towards the downside with technical indicators firmly in the negative.

All in all Theresa May’s decision to call a snap general election in 2017 seems set fair to count as one of the most decisive home goals ever scored by a party in government. The desire was too firm up the Conservative government’s position and grant it a mandate to negotiate Brexit strongly with a country united behind a strong administration. The end result has left a weak and shocked minority government in office, beholden for its ultimate support to a small party that, in one vital area of policy, is committed to steps that would sabotage the Brexit in the eyes of many of its supporters. Thus a weakened government faces negotiations vital the country’s economic future. It is not surprising that Sterling looks set to perform negatively in most major pairs.

Spread betting, CFD trading and Forex are leveraged. This means they can result in losses exceeding your original deposit. Ensure you understand the risks, seek independent financial advice if necessary. The value of shares and the income from them may go down as well as up. Nothing on this website constitutes a solicitation or recommendation to enter into any security or investment.

 

 

Scottish Referendum

Pound Takes a Hit Upon Scottish Referendum Murmurings

Greg Swift, A spokesperson for UK PM Theresa May, has reported that May remains against a second Scottish independence referendum. While speaking to reporters in London he stated that should the question be asked as to whether there would be another referendum, then the answer would clearly be a defiant “No.” Also, he pointed out that the Scottish people made their decision blatantly clear in 2014, to remain in the UK. The results were definitive, legal and fair, as such, it is no surprise to see that May wishes to stick to her guns over the matter. Swift was responding after a noticeable reduction in the pound, which was brought on by reports that the Scottish government was making preparations to have a second referendum vote.

 

A reduction of about 0.6% against the dollar was the level to which the pound dipped after May’s team was preparing for controversial Nicola Sturgeon, to use the Brexit controversy as a reason to call for yet another vote. During September 2014, Scotland voted 55% – 45% to stay in the UK. However, a poll carried out by the Glasgow Herald found that the split in favour of remaining within the union had shrunk down to just two percentage points. Bookmaker William Hill said that there’s a greater chance of Scotland’s nationalists succeeding should there be another referendum, with 7/4 odds for a “Yes” vote versus 2/5 odds for a ”No” vote.

 

The Scottish government refrained from commenting on the Times report.  However, since the historical Brexit vote on June 23rd, Sturgeon, the SNP leader, has continuously said that a second independence referendum was “likely to happen” after Scottish nationals opted to remain in the EU. She even stated that she felt that the UK government was running out of time with regards to Scotland’s wish to remain in the single market.

 

As with other ministers, May has made it known that they do not wish to chase after single-market membership within their talks of an after-Brexit EU deal. According to government officials involved in Brexit planning, the PM intends to prompt Britain’s withdrawal from the EU, doing so close to the time that a summit takes place in Brussels. The Scottish National Party holds its annual Aberdeen-based spring conference just 7 days later, with it sure to be an event with strong independence referendum ramifications. Economic editors such BBC’s Robert Peston is of the opinion that the UK’s increased cost of finance and the resultant harm to economic growth will continue for as long as the uncertainty about the referendum persists.

 

The reality is that, with the pound wavering, another Scottish independence vote could do further damage. In fact, the level of damage that it could do may actually prove to be rather telling given time. That being said, while it’s something that the SNP is clearly pushing for, the reality is that they are only likely to receive what they’re after under specific terms, with Theresa May certainly set to call the tune.

 

Spreadbetting, CFD trading and Forex are leveraged. This means they can result in losses exceeding your original deposit. Ensure you understand the risks, seek independent financial advice if necessary. The value of shares and the income from them may go down as well as up. Nothing on this website constitutes a solicitation or recommendation to enter into any security or investment.

 

Alexander Bowring is a London based writer and a Southampton Solent University Screenwriting graduate. He has worked alongside TV personality and Telegraph feature writer Alison Cork, whilst also having produced content for ITV, This Morning, Canvas8, Who’s Jack, Alison at Home, and Bonallack & Bishop Solicitors. Alexander also has a keen interest in investments.

USD/JPY poses interesting questions following Trump win

USD/JPY poses interesting questions following Trump win

Performance charts seldom lie, with the USD specific option showing you that the plunge in the dollar that was expected to arrive following the victory of Donald Trump did actually happen. The dollar really came back to life after the outcome of the election was, but the dip that occurred is pretty much clear to see. The improvement is because Trump is expected to spend more and increase inflation. The unpredictability of Trump was expected to lead to the stocks and the dollar overreacting and plummeting in the event he won, but the market being on such an upswing following his victory is about as surprising as the victory itself. All the polls were in the favour of Clinton after all.

 

The sentiment was magnified for the USD/JPY because the moves of the dollar were intensified thanks to strong moves by the yen. During Election Day, as it became more apparent that Trump had a chance of winning, so the dollar did indeed start to plunge. As was also expected the perception of market risk lead to people investing in, and boosting, the safe-haven of the Japanese yen. This drop in the dollar and rise in the yen led to the USD/JPY rate plummeting all the way to 101.00 before it eventually bounced back.

 

By the time trading opened on the day following the election, there was a reversal in this overreaction and the dollar bounced back and the yen was put under pressure by the appetite for risk following Trump’s win. This led to USD/JPY surging above its 200-day moving average and above major resistance to settling at around 105.50. The dollar was further strengthened and the yen was further weakened just 24 hours later, pushing the USD/JPY even further to the point that it broke out above the key downtrend line that went all the way back to February 2016.

 

It was expected that the market would be this bullish if Clinton won, but it looks like this outcome was the case with a Trump victory as well. The strength of the dollar was also further enhanced because there was less post-election volatility than usual. It’s also expected that the Federal Reserve are on the verge of raising interest rates. St. Louis Fed President James Bullard said that he foresees a rate hike, although the actual rate will still be pretty low for years to come. With the dollar continuing to gain strength leading to the mid-December Fed meeting, as well as the continuation of optimism in the market, it’s expected that USD/JPY will continue to rise.

 

The next resistance targets to be broken are the 108.00 and the 111.00 levels. It’s not known if it can reach those highs, but the markets will give it their best shot. Right now all eyes are on the next meeting of the Fed and President-Elect Donald Trump. Given the way that he’s already restored the markets, perhaps some people will be a little less apprehensive about the billionaire sitting in the oval office.

 

Spreadbetting, CFD trading and Forex are leveraged. This means they can result in losses exceeding your original deposit. Ensure you understand the risks, seek independent financial advice if necessary. The value of shares and the income from them may go down as well as up. Nothing on this website constitutes a solicitation or recommendation to enter into any security or investment.

 

Alexander Bowring is a London based writer and a Southampton Solent University Screenwriting graduate. He has worked alongside TV personality and Telegraph feature writer Alison Cork, whilst also having produced content for ITV, This Morning, Canvas8, Who’s Jack, Alison at Home, and Bonallack & Bishop Solicitors. Alexander also has a keen interest in investments.

How Brexit Is Affecting Currency Exchange Rates

Figuring out when it is best to transfer money oversea or to buy foreign currency for your holiday is never an easy task, particularly with the whole uncertainty regarding Brexit currently gripping Europe. Recent weeks have seen the euro and sterling go up and down like a rollercoaster, as the currencies have been hammered as the UK voted to depart from the EU.

How Brexit is affecting currency exchange ratesThe direct of Smart Currency Exchange, Charles Purdy said; “At the beginning of last week, we saw the euro gain further strength, reaching a two-week high against sterling. This was due to EU referendum polls in the UK taking centre stage, with the latest polls indicating a jump in ‘Brexit’ support, which caused sterling weakness across the board. This trend was reversed overnight as the likelihood of a June US interest rate hike receded. The euro had a slightly disappointing day on Tuesday, despite better-than-forecast revised growth figures, as it lost ground against sterling and the US dollar.”

Later last week, the pound sterling dropped again, after the leave campaigned sneaked a victory, leaving the EU in shock. If you are needing to make a currency transfer in the near future, perhaps you are making a Europe property purchase, or have a mortgage there, it makes sense to seek the advice of a currency specialist first. It is possible to lock in a more favourable exchange rate in advance, meaning if the exchange rate drops further, you will still make the transfer at a better rate. This process is known as a ‘forward contract’ and will allow for peace of mind if you are anxious about a potential weakening of the pound.

A forward contract can be utilised effectively if you think Britain will suffer further in the post-Brexit era, and sterling will drop as a result of the result the panic. Reports are surfacing that the pound could drop by up to 20% if issues begin to swirl, on the other hand, though, consider if the public votes rally behind being independent of the single market, resulting in you missing out on better rates by not waiting. Using a specialist does come with other advantages as well, you are likely to receive a much better exchange rate than what is offered by most financial institutions like banks. You should also receive no commission and lower fees.

Holidaymakers heading abroad to Europe in the upcoming weeks may also want to take advantage of sterling’s value now if they believe the UK will plummet further. Again, though, remember if the nation rallies you could lose out. Regardless of how you think the country will pan out, you should never leave it until the airport before exchanging currency. The best rates can be found online, with many providers offering free next day delivery or collection from a local store, both with no commission.

Spreadbetting, CFD trading and Forex are leveraged. This means they can result in losses exceeding your original deposit. Ensure you understand the risks, seek independent financial advice if necessary. The value of shares and the income from them may go down as well as up. Nothing on this website constitutes a solicitation or recommendation to enter into any security or investment.

Alexander Bowring is a London based writer and a Southampton Solent University Screenwriting graduate. He has worked alongside TV personality and Telegraph feature writer Alison Cork, whilst also having produced content for ITV, This Morning, Canvas8, Who’s Jack, Alison at Home, and Bonallack & Bishop Solicitors. Alexander also has a keen interest in investments.

Post-Brexit – Pound vs Euro

The Brexit decision shattered investor confidence and in the aftermath of the decision everything from sterling to stocks had been in for a bumpy ride. Further economic damage settled in the next morning after the results had been released, as investors abandoned the pound even more. The world was also shocked as Prime Minister David Cameron declared that he will be stepping down from his post come September. Scottish Prime Minister Nicola Sturgeon also hinted on the possibility of a Scottish referendum to declare independence from Britain. Furthermore, a vote of no confidence had been issued against Jeremy Corbyn, a political leader of the Labour party, leaving the UK political scene in a state of disarray.

post-brexit-pound-vs-euro

Saying that, there are positive aspects to Brexit though and Britain would likely trump financial doom-prophets in the long run. This can be seen in the positive light of Cameron’s resignation speech. Quoting part of his speech “I said before that Britain can survive outside the EU and indeed that we could find a way”.

Pound movements

 

The British Pound has been on a downhill slope with the decision taken to leave the European Union. This decision came as quite a surprise to most, as polls indicated that Britain was all set to remain part of the EU. However, this has certainly not been the case, as this news sent the pound spiralling downwards at a fairly sharp rate. If that wasn’t bad enough, even the euro has taken some losses to its more successful peers like the US Dollar. Analyst forecast that this downward movement would likely last for some time, as investors would be wary of investing in Britain before Brexit influences had subdued and the economic climate has stabilised once again.

At the moment, no Article 50 announcement has been made, so this still leaves Britain with some power to influence its own destiny. It would likely not nullify the referendum, as doing so would only serve to worsen the economic climate by creating political havoc within the country itself.

Euro movements

 

Speaking on the euro further, it did perform better aftermath of the referendum offering a strong run against the pound. In other forex pairs, the euro had however suffered some losses due to investors seeking a safe haven for their capital. Once Article 50 has been called into power it remains to be seen what the European Union will do, since negotiating power would then be in their hands, putting them in a much better position to influence economic decisions, without the input of the UK.

Future forecast for both currencies

 

Direct future results will likely be influenced to a great extent by the continued ramifications of the referendum results, although other economic announcements could have a significant impact. These announcements could be made by either Britain or the European Union itself. The Scottish independent poll could also play out to have an influence on both the pound and the euro, with the impact on the euro being less severe. Spain’s general election would also likely have an impact on the Eurozone, influencing this currency.

Spreadbetting, CFD trading and Forex are leveraged. This means they can result in losses exceeding your original deposit. Ensure you understand the risks, seek independent financial advice if necessary. The value of shares and the income from them may go down as well as up. Nothing on this website constitutes a solicitation or recommendation to enter into any security or investment.

Alexander Bowring is a London based writer and a Southampton Solent University Screenwriting graduate. He has worked alongside TV personality and Telegraph feature writer Alison Cork, whilst also having produced content for ITV, This Morning, Canvas8, Who’s Jack, Alison at Home, and Bonallack & Bishop Solicitors. Alexander also has a keen interest in investments.