Sterling Plummets after UK Hung Parliament (James Lovick)

The pound started the week by moving sideways against the dollar, before gaining enough traction to send it to a 10-day high – rising to the 1.38 level for the first time since 16 July.

The volatility for sterling exchange rates continues after the UK election ended with a hung parliament with no party securing an overall majority. GBP EUR fell to 1.1286 at the low before climbing higher braking over 1.14. The conservative party remains the largest party having lost 12 seats and has now formed a minority government with the support of the Democratic Unionist Party (DUP).

So far the markets have settled slightly with a small recovery for the pound although politics will inevitably dominate the news over the weekend with more volatility to be expected. There should be even more volatility to follow next week as the markets digest how much of an impact this political change will actually have on Brexit. Those clients with requirements would be wise to make contact and consider your options. In these markets there are frequently good opportunities for buyers and sellers alike.

GBP USD has fallen marginally after the election although Trump uncertainty over the investigation into his links with Russia are keeping the dollar at bay.

The formal Brexit negotiations commence 19th June and this date should be marked in everybody’s diary! A lot of information is likely to be disclosed at an early stage which should have a direct bearing on where sterling goes from here. Clients selling Euros have seen a great win opportunity but it remains to be seen whether there will be much more room left in this rally. It may be prudent to take advantage of the spike which is available and take the safer option.

Inflation report hearings in the UK could make for interesting reading and point to future monetary policy and would normally have the potential to be a big market mover. Politics should continue to dominate however.

If you would like further information on sterling exchange rates or any of the major currencies and to discuss how we can assist then please feel free to contact me on 0044 1494 787 478 and ask one of the team for James. Alternatively, I can be emailed directly on [email protected]