The pound is trading virtually unchanged today as some analysts are predicting dire circumstances for the British currency as the year unfolds.
With Boris Johnson, the former mayor of London exiting the race for prime minister, and Nigel Farage, the leader of the Ukip party resigning, it seems as if there is political turmoil in the UK with no back up strategy,
“After the Brexit referendum, the U.K. has to urgently get its political act together,” noted Mohamed El-Erian, the chief economic adviser to insurance company Allianz
‘Plan B’ depends on the politicians in London and across the Channel, but so far they have not stepped up to their economic governance responsibilities.” he added.
In an even more pessimistic scenario some see the pound falling to parity with the US dollar which would send prices skyrocketing and a backlash from the local consumer,
A 20 per cent fall from pre-referendum levels was likely, so $1.15 remains the base case. But if there is a sharper than expected economic contraction or the political impasse drains confidence, “parity is quite possible” noted George Magnus, senior economic adviser at UBS
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