Carillion to enter liquidation
Sterling has had a very impressive week against the US dollar hitting pre-Brexit vote highs of 1.38 yesterday. We have also seen GBP/EUR remain in the 1.12s despite the recent formation of a coalition government in Germany.
However things are not all rosy. Carillion, Britain’s second largest construction firm could go into liquidation which could cause thousands of job losses.The government has received criticism for awarding contracts despite knowing the company was in trouble. Carillion are currently working in public services schools including running prisons and schools, not to mention their involvement in HS2.
With Carillion’s links with other firms working on this project this could have a detrimental, wide spreading impact. There is also a huge amount of pension money tied up with the firm, let us hope it does not mimic the situation with BHS.
Phase Two of Brexit talks could create GBP weakness.
Phase Two of Brexit negotiations will still be the biggest factor in the Pound’s value. At present things do not bode well. Both parties are at loggerheads before talks even begin. Trade will be one of the most difficult issues to overcome and talks are expected to be far tougher than phase one. A target has been set for October to have negotiations completed , a target that I feel may well be extended. I think short to medium term the pound will remain under pressure. I am of the opinion a deal will eventually be struck however and Sterling will have the opportunity to have a significant rally. I would not expect this occur until late 2018.
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