Connect with us

Hi, what are you looking for?

Business

Hard Brexit anxiety forces pound to plummet to its 5-weeks lowest

On Monday, the pound posted sudden losses against a number of major currencies. This post took place in reaction to the government of the U.K. as it is believed that they are leaning towards a hard Brexit, which means the country would be taken off of the single market. This year, sterling GBPEUR was at its lowest it has been since August of last year against the euro. Consequently, the exchange rate went as low as €1.1472 as reported by FactSet data. While against the dollar, the sterling GBPUSD went from $1.2967 to $1.2916 in New York.

This recent news indicates that the strategy of a hard Brexit is the most likely strategy. The U.K. plans to adopt a strategy for departure from the EU. Consequently, the pound has experienced a dramatic impact in the form of a sharp fall. According to the Financial Times, leading bankers in the U.K. are becoming increasingly worried that the Prime Minister, Theresa May, will end the access that the country has to the EU customs union and the single market. People fear that bidding farewell to these markets will erode business confidence and will also set off a corporate exodus. A survey of a hundred CEOs from some of the major U.K. companies indicate that more than 75 percent of them are thinking of moving their operations and their headquarters out of Britain due to the Brexit vote.

Anxiety regarding the hard Brexit has peaked recently. David Davis, the minister of the Brexit, claims that it is unlikely that Britain stays in the EU single market. Meanwhile, the secretary of international trade Liam Fox indicated that the U.K. has plans of becoming an independent constituent in the World trade organization. The biggest problem with the hard Brexit is that it creates greater hurdles that businesses have to overcome. Additionally, the ability of the firms in the U.K. to admit business in the EU appears to be under threat as explained by the chief economist at FxPro, Simon Smith.

On the other hand, such news has provided people with a reason to take a bearish viewpoint on the currency. Meanwhile, the FTSE 100 also ended down 1.32 percent with only a handful of stocks rising. The biggest fall was experienced by the intercontinental hotels which dropped by six percent after Morgan Stanley had cut its rating from equal weight to underweight on the stock. Another victim of the downgrade was Lloyds Banking Group, which fell by three percent once Goldman Sachs downgraded the shares of the banks from neutral to sell. In fact, banking stocks all across Europe experienced pressure after the share of Deutsche Bank, Germany fell to seven percent, which is the lowest level it has seen since the 1980s.

Written By

You may also like:

Life

Their stories are divided into before and after.

World

Child of the caliphate: A girl in the vast al-Hol Islamic State camp in northeastern Syria - Copyright AFP Delil SOULEIMANRouba EL HUSSEINIAli is...

Social Media

Wanna buy some ignorance? You’re in luck.

Tech & Science

Under new legislation that passed the House of Representatives last week, TikTok could be banned in the United States.