Sterling has hit an 18-month high against the US dollar and a three-year high against the euro after the Conservative party won the general election with a majority. Investors have welcomed the results as the Prime Minister’s majority means clarity and certainty on Brexit. The pound’s surge vs the US dollar is one of the biggest gains in a decade and economists are now predicting that sterling could strengthen even further.

Since the release of Thursday night’s exit poll clearly showing Boris Johnson was expected to win the election, the pound has gained strength, both against the US dollar and the euro. Now investors are hopeful that Brexit will be delivered on time by the end of January 2020 with Johnson’s Brexit deal.

Conservative triumph: Best outcome for the markets

According to financial analyst at MUFG, Lee Hardman, the election is “the best outcome for financial markets in the near-term. It brings a clear end to the Brexit deadlock in parliament, which will be welcomed and help to ease some of the ongoing uncertainty. The risk of a ‘No Deal’ Brexit will pushed out until the end to next year, and the new government will not be as reliant on securing support from hard Brexiteers during future negotiations. The pound is well placed to extend its advance even after recent strong gains.”

However, other economists are warning that the possibility of a no-deal Brexit in 2020 will put more pressure on the economy. Paul Dales of Capital Economics said that “The majority confirmed in Parliament will allow Johnson to pass his Brexit deal, which would mean the UK leaves the EU on 31st January and enters a status quo transition period until 31st December 2020. A fiscal stimulus of £20bn per year (1% of GDP) may then follow in a Budget in February. But this probably won’t unleash a tidal wave of business investment that leads to much faster GDP growth, much higher interest rates and a much bigger rise in pound than the gain … already seen. That’s because businesses will fear that the UK could end up trading with the EU on WTO terms after 31st December 2020, the immediate effects of which would be similar to those of a ‘no deal.’”

While many investors and analysts have highlighted the uncertainty regarding the next phase of Brexit and the future relationship the UK will negotiate with the EU, nonetheless, the Conservative’s victory is the ideal result for businesses as a clear majority eliminates the risk of a hung parliament and Corbyn’s radical politics, and eases anxiety about Brexit.

Getting Brexit done

This is why, the next step would be for the Prime Minister to secure the right deal with the EU so that businesses can thrive. The Institute of Directors, for example, is asking Johnson to give time to businesses to adjust and secure the right deal with the EU rather than just any deal. Jonathan Geldart, director general of the Institute of Directors, said:

“Business leaders’ thoughts will immediately be turning to Brexit. For directors, ‘Get Brexit Done’ will only have meaning once the details of our long-term future relationship with the EU are clear, they need a framework to plan for the future from. The Prime Minister must resist the urge for arbitrary negotiating deadlines, and should commit to a proper adjustment period that starts when businesses know the full detail of what changes they may be facing. Our members have made clear that the content and shape of any new deal are much more important than simply the speed in getting there.”

Not only the markets, but also the US president welcomed the results. Donald Trump tweeted: “Congratulations to Boris Johnson on his great WIN! Britain and the United States will now be free to strike a massive new Trade Deal after BREXIT. This deal has the potential to be far bigger and more lucrative than any deal that could be made with the E.U. Celebrate Boris!”

Indeed, with the election results, the UK has demonstrated its preference for Johnson’s clear-cut logic for getting Brexit done and its distaste for Corbyn’s left-wing policies. At the same time, analysts are cautious about the dampening effect Brexit has had on growth and the uncertainty it will continue to exert on the economy as the UK strives to secure a trade deal.

Transferring money overseas?

If you are transferring money overseas and want to protect your funds from currency fluctuations, then getting in touch with currency exchange specialists Universal Partners FX, will provide you with the certainty and security you need. UPFX monitors the markets and offers strategies to manage market volatility so you always know your money is delivered fast and securely. For more information, visit their website or give them a call.  

Brexit

France and Spain’s property markets are among the favorites for many Brits, despite Brexit. In many ways, Brexit did not change Brits’ desire to move permanently to France or Spain, indeed, it has, paradoxically made it stronger. With Brexit strategy in tatters, the UK confused about its own European identity and a climate that cannot compete with that of sunny Spain, for example, many are determined to look for a home overseas.

Uncertainties of moving abroad

Planning to purchase property abroad is a long process, and for those who have already started or are in the midst of deciding, there is nothing that can really stop them, not even the uncertainty of Brexit. Nonetheless, there are worries about their new life in Europe. For instance, many Brits worry about the lack of affordable healthcare, long legal processes of buying property, or just simply maintaining their property back in the UK due to a weak pound. But these are issues that can be tackled, to a certain extent. Finding a place in the sun to retire is perhaps a bigger enough reason that propels Brits to move abroad, even though they are aware of the possible problems. A peaceful life in the countryside is definitely more attractive, than remaining trapped in a little house back home. Enjoying a higher standard of life is a solid fact that cannot be shaken by the uncertainties of the process or the current unstable political landscape. As many have enjoyed the perks of living abroad through their regular visits and holidays overseas, it is very difficult to resist the lure of the good weather and of long cool nights under starry skies.

More European because of Brexit?

With the European elections taking place from the 23 to 26 May, it is impossible to forget Brexit. It is interesting to see how it has affected Brits in the way they perceive themselves. According to Radio France Internationale, 23-year-old English au pair Emma has been in France since August and despite coming from Thetford, where many voted for Brexit, she feels European and wants to live in Europe. It was, ironically, Britain’s decision to leave the EU that pushed her to move to another country. Like many other Brits living abroad, Brexit has affected their decision and made them understand the benefits of their European heritage. As the article reported, “the Brexit decision has created practical problems for them but also raised questions about identity.”

Sterling and Brexit

Whether motivated by Brexit or your own personal desires and wants, the decision to move overseas comes with a lot of considerations. One of the biggest ones is making your money go further, and taking advantage of currency volatility so that it does not affect your savings. Everyone has noticed that this week the pound has suffered against the euro due to turmoil in Downing Street affecting currency markets worldwide.

The fact that Theresa May’s premiership is now being questioned after her failure to get approval for her Brexit deal, has impacted on the pound, which dropped against the euro.

Theresa May’s time is coming to an end. Initially against Brexit and later having to negotiate a deal— which for many hardcore backbenchers and hardline Brexiteers was not desirable or close to what the British people have voted for in the 2016 referendum—May was given an almost impossible task. Her replacement and the possibility of a no-deal Brexit are now appearing to be, not only the stuff of nightmares, but also a reality leading currency traders to avoid the pound.

Buying property overseas is a complex process and having a trusted currency broker by your side is a massive advantage when it comes to the current movement of the pound. Universal Partners FX can help you navigate a volatile market and transfer money internationally, mitigating the negative effects of Brexit and a weak pound, and ensuring that your funds are not impacted by exchange rates. Get in touch today with your currency dealer and find out how much you can save on your currency transfers.