Sharp moves in GBP and VAR Capital views
I am sure you have seen the sharp move in GBP recently. Since the latest high of 1.33 in March 2019, sterling has depreciated against the dollar almost 8.5% to the current 1.215 as the risk of a no-deal Brexit significantly increased. Why this is happening? The market is clearly catching up with the view that hard Brexit ...
I am sure you have seen the sharp move in GBP recently. Since the latest high of 1.33 in March 2019, sterling has depreciated against the dollar almost 8.5% to the current 1.215 as the risk of a no-deal Brexit significantly increased.
Why this is happening?
The market is clearly catching up with the view that hard Brexit is definitely a possibility and has therefore been weighing on GBP. Even though the market sentiment seems quite negative already, we do not expect any quick relief and expect the pound to continue to struggle in the short term.
What are the impacts on my portfolio?
Weak sterling tends to be beneficial for the largely internationally exposed FTSE 100 but despite this usual currency correlation, we believe the market may experience a period of sentiment driven volatility. We continue to be cautious on the UK market.
Also, our portfolios holders should not worry due to the following reasons:
What will happen to GBP?
While we do not intend to get into the business of forecasting short term currency movements, we would like to share the below thoughts highlighting what we believe to be the three most likely scenarios affecting the near term direction of GBP.
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VAR Capital Ltd is a limited company incorporated in England and Wales with registration number 09159540. UK registered office 41 & 43, Maddox Street, Mayfair, London W1S 2PD. VAR Capital Ltd is authorised and regulated by the Financial Conduct Authority (FCA). Firm reference number 718558. VAR Capital is a trademark of VAR Capital Limited under the UK intellectual property regulation. Trademark number: UK00003429839