06.24.2016

Investors to Capitalize on the Brexit-Battered Pound

Sensible investors will be seeking to cash in on the weak pound, affirms the Head of FX at one of the world’s largest independent financial advisory organizations.

 

The observation from James Stanton, deVere Group’s Head of Foreign Exchange, comments as sterling fell to a three decade low in the wake of Britain’s decision to leave the European Union.

 

Mr Stanton explains: “The Brexit victory has dragged the pound down, as was expected.  But the scale of the drop has been a shock – it plummeted to its lowest level since 1985.

 

“However, moving forward as the dust settles, it can be expected that GBP/USD resistance could be found at 1.35 with support levels found above 1.38.  Similarly, I believe that GBP/EUR will soon test levels at 1.20.

 

“In the longer term, I think that the Euro will be fundamentally weakened by Brexit, as it could serve as catalyst for full EU break up as other member countries calling for referendums.”

 

He goes on to say:“ This news was always going to create a huge panic sell-off and bearing in mind the wider impact this will have on the Euro, many sensible investors will be seeking to look to cash in on a Brexit-battered pound.

 

“UK banks are stress-tested to deal with this kind of news, as Mark Carney, the Governor of the Bank of England has said this morning, and will offer a lot of support during these testing times.

 

“We can expect the pound to begin to stabilize over the next week, thereby creating better selling opportunities for investors and, indeed, the wider public.

 

“I strongly believe GBP/EUR will recover back nearer to the 1.30 mark and GBP/USD to 1.45 by the year’s end.”

 

Mr Stanton concludes: “Investors will be using the plummeting pound to their long term financial advantage.”

 

Related articles

  1. Hermes Warns of Brexit Risk to Asset Managers
    Daily Email Feature

    Equivalence a Theme at FIA IDX

    Trade associations have asked for an extension of the temporary equivalence decision for UK CCPs. 

  2. Temporary equivalence is set to expire on June 30 2022.

  3. Margins Raised Ahead of Brexit Vote

    IRS trading volumes have fragmented without an equivalence agreement.

  4. Brexit Muddles Future of UK-EU Linkage

    Most EU member states had an increase in bankers earning more than €1m.

  5. A structured home-office work mix can optimize a trading desk's efficiency, Fidelity's Tom Stevenson writes.