Is the Pound’s volatility to Brexit sustainable for the future?

Look, let’s not beat around the bush, Brexit has dominated newsfeeds across the nation for the last two years and for the most, all I hear is that many are bored of Brexit. Of course that isn’t the case for myself but nonetheless, it is important to see the impact of the pure domination of Brexit in the media on the UK economy.


For most, I assume the distinction and connection between the instability of the Pound and the relation to the ongoing Brexit negotiations may have gone unnoticed, however, it has become clear to some that based upon positive statements from the EU or UK, the Pound strongly rises and vice versa. For example, when Michel Barnier announced on Monday that the EU strongly opposed the Chequers Plan, the Pound tumbled, as a result, to its worst position for four months, yet on Wednesday, the Pound climbed strongly due to a report stating progress on the Brexit deal. By no means are these the only examples of correlation between Brexit and the performance of the Sterling but, for me, the connection is clear.


Now whilst this can be considered positive or negative depending on the type of person you are, it shows the significant imposition of the British economy due to the fact that one newsfeed can so distinctly and clearly affect the currency. Firstly, the fact that a connection can be made between the two shows the current weakness of the economy to Brexit or rather its susceptibility to just one factor. A strong economy should be resilient to many factors and newsfeed and even if this isn’t the case, there should still be two clear opinions towards a certain newsfeed that mean that speculators ultimately cancel each other out; however, with Brexit, the country has become so divided and there becomes a certain point where ideology cannot repair the economic and social damage done by large industries exiting the UK. Secondly, in the event of a No Deal, this reliance of the Pound (and of course the investors who speculate on the market) on the newsfeeds of Brexit could cause the entire market to fall into a recession as the £234 billion trade with the EU disappears and the financial sector, for example, could potentially be left in disarray as their operations are left motionless.


Now I respect the opinion that No Deal cannot be allowed by the Government or the EU to happen and so these would be unlikely circumstances to proceed with but nevertheless, as it is purposeful to be engaged with the matter fully, it is important to understand why the newsfeeds focusing on Brexit only has caused a deep intertwinement between the two and that any significant loss of trade and services could potentially cause chaos across the nation.


And with that gloomy thought, I sign off on this blog post and if you liked this, please let me know and I can produce more :) - written on 05/09/18