|USD/NGN yesterday’s close||392|
|Please get in touch with us if you need the latest USD/NGN price|
BREXIT PLAYING GAMES. After a short term rally on Friday that saw the GBP rally past 1.30, the euphoria popped and the GBP fell like a stone over a big figure as BREXIT consequences gripped yet again. I read yesterday that PM May is likely to delay BREXIT until at least 2019 (a year before the general elections) as she feels they simply don’t know where to start the negotiation with the EU on the terms of the exit. This is nothing new given that both Boris and Gove admitted they too don’t have a clue what the shape negotiations will take and how they will be concluded. What we do know and this I think is a certainty is if the UK want the same trade terms they currently enjoy, they will have to allow the free flow of migrants in and out of the UK. That will anger many people that voted leave. You cannot have your cake and eat it. The EU will never allow that as it will be a vote of no confidence within the EU and that is something they can ill afford. Already we have seen negotiations between Canada and the EU almost at breaking point and the EU made it clear to the Swiss recently that if they want to remain in the EU they too have to allow the free movement of migrants (something the secretive Swiss will not like to say the least). So all in all things are not looking good. I have a feeling the negotiations will be fraught with difficulties and negativity until someone throws on the towel and accepts the terms that are on the table. However what those terms are currently simple guesswork.
There has been additional chatter that interest rates might have to drop again to 0.00% to further boost the UK economy. Honestly, I think the opposite should happen and Carney should raise rates. While this could add pressure on an already fragile economy, perhaps it will slow down the demand for cheap money which as we all know led to the financial crisis of 2008.
The point I am trying to make is the BoE should make it tough for banks and corporates so that they tighten their belts and invest their current assets and workforce in improving their sales. The UK electorate’s spending habits have already changed and people are going to be a lot more wary when deciding to invest large chunks of their capital. We are certain of one thing, the UK economy is heading into the roaring 40’s and screaming 50’s (these are strong westerly winds in the South Hemisphere) and we all have to tighten our belts because rest assured things are going to get tough. I am sorry to say but those who voted leave have themselves to blame for any financial hardship that comes their way and they have no right to blame the government OR ask the government for financial help. In fact the government should immediately start withholding benefits and pensions to fill the massive £60-£80bn black hole that will be left void as a result of the exit from the EU (yes I am still angry and saddened by Brexit).
The GBP opens pretty much where we left off on Friday, weak and tipsy. It looks like there is more weakness to come and the market remains short GBP on all fronts. Not that I know anything, but it is my sincere hope that in the coming weeks as importers continue to battle ahead with the high cost of doing business abroad (selling £ to buy foreign ccy), the BoE and government will come out with something that gives the GBP a boost in the short –medium term. While the BoE will not actively intervene to prop up the GBP, there is verbal intervention that I am hoping for. Just a dream, absolutely, but hey let’s hope this dream comes true in some way.
Any financial promotion contained herein has been issued and approved by ParityFX Plc (“ParityFX”); a firm authorised and regulated by the Financial Conduct Authority (“FCA”) as a Payment Services Institution with registration number 606416. It is for informational purposes and is not an official confirmation of terms. It is not guaranteed as to accuracy, nor is it a complete statement of the financial products or markets referred to.
Opinions expressed are subject to change without notice and may differ or be contrary to the opinions or recommendations of ParityFX. Unless stated specifically otherwise, this is not a recommendation, offer or solicitation to buy or sell and any prices or quotations contained herein are indicative only. To the extent permitted by law, ParityFX does not accept any liability arising from the use of this communication.
Follow our tweets @parityfxplc
Follow us on LinkedIn ParityFX Plc; and at www.parityfx.com