Good morning,
At the close of London trading hours yesterday, the pound had racked up an unbelievable 4.43% loss against the Euro from Monday 24th. In short, the preceding four months of inch-by-inch gains in the face of political gridlock, no-deal chances, an extension and an election have been haemorrhaged within a week.
Sterling is finding it particularly difficult, as it is not only suffering from perceived tightening in trade flows into Britain due to the Government’s hard-line negotiation stance regarding a free trade deal with the EU; but also due to the ongoing capital flow restriction attributed to the ongoing Coronavirus outbreak. On top of this, it is becoming ever more likely that the Bank of England will be forced to cut rates and increase the supply of currency to mitigate the damage being done by the spread of the virus.
Keen to refocus the agenda to more positive news, the Government released a document outlining how a free-trade deal with the USA should push GDP gains of 0.16% across 15 years. Whilst sounds good at the cabinet level, it doesn’t take a genius to see that 0.16% doesn’t cover the predicted -7.6% decline across the same time frame in the result of a no-deal with Europe; which arguably, the Government would need to obtain such a deal.
Have a great day,
Author: Joshua Haden-Jones, Senior Relationship Manager
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