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Market Tools / Brexit Effects on Businesses

As the pound suffers a severe shock following Brexit, which has brought the Euro to Pound to US Dollar to a “succession of multi-year lows”, the future is looking rather uncertain. A recent article from Full Fact shows how the falls are “mainly a result of the expectations in investors who believe that the UK’s economy won’t grow as quickly in the future.” This is exacerbated by Theresa May’s recent announcement that we should expect a “Hard Brexit” and possibly for the UK to be out of the single market, bringing the pound to a further loss against the Euro and Dollar.

The issue of the single market is a hugely contentious one. One of the negative effects this could have is Unilever increasing the prices of many of its products including hugely popular Marmite and Hellmans. Imports becoming more expensive due to decreasing demand has led to a boost in the euro, with both currencies closely fluctuating. Adam Solomon, one of the authors of Exchange Rates.org says: “FX markets see the pound vs euro exchange rate converting at 1.” He also claims that “analysts are predicting another 5-6% decline with some even expecting a move towards parity with the Dollar”. The unemployment rate is also believed to “have held at 4.9% in the three months to August, while the number of jobless claims looks set to have risen further in September”. Although these estimates are rather on the negative side, Theresa May has agreed to give parliament permission to debate the Brexit deal, to calm fears surrounding her “gung ho approach and seemingly cavalier attitude towards a hard Brexit”.

Link: http://www.exchangerates.org.uk/news/16537/pound-to-us-dollar-euro-currency-news-and-market-forecast.html