Brexit: are we in for a stormy summer?

1st March 2016

The date of 23 June has been set for the EU referendum. It could be a volatile run into summer

£ v US Dollar: A stumbling few months

Source: uk.finance.yahoo.com

February was the month that Brexit (UK exit from the EU) started to hit the headlines in a big way. The Prime Minister finished his negotiations after the traditional late night arguments and confirmed that the remain-or-leave question would be asked on Thursday 23 June.

One measure of global investors’ concern about the impending vote can be seen in the performance of sterling. Shortly before Christmas it was trading at over $1.50 to the US dollar. By the end of February, it had sunk below $1.40. It was a similar story for the pound against the euro: having started December at over €1.40, by the end of February the rate had fallen to about around €1.27.

The currency’s performance is a reflection of the uncertainty felt by global investors about the UK’s future and is not directly related to the volatility seen in share markets. For many of the constituents of the FTSE 100, the fate of sterling is largely irrelevant. It is just one of many currencies for the multinationals and a distinctly foreign currency for most mining and resource companies. A fall in sterling is therefore no reason to avoid share-based investment. It could even be argued that it might be a reason for increasing exposure to UK exporters, who generally benefit from a weaker pound.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.

Related Articles

Making a Will during COVID-19

Thinking about how well we are prepared for our futures As coronavirus (COVID-19) leaves many of us working from home surrounded by our families and loved ones, it is inevitable that we start to think about how well we are prepared for our futures.

Read more

'Future self'

Boosting future retirement savings Young people are faced with a unique set of challenges when it comes to saving for retirement. One of these is perception. They can often think of their ‘future self’ as a different person and so may prefer holding on to their income for more immediate priorities, like a first home deposit, rather than saving for someone they perceive as a stranger.

Read more

State Pension age rises

How could the change impact on your retirement plans? For the first time in over a decade, the point at which people can claim a State Pension (the ‘State Pension Age’) is simple. If you have reached your 66th birthday, you can claim it. Otherwise you cannot.

Read more