Do we stay or shall we go? Brexit impact on the Euro and the US Dollar

In ten days time we will have an answer to the question that has been plaguing the pound and financial markets across the globe. Will the United Kingdom break up from the European Union? The answer to this question will send tremors through financial markets and could see some large swings on sterling. Most polls are now showing that the Leave camp is winning and this is worrying investors as there is no doubt that Brexit brings with it tremendous uncertainty for business. The overwhelming consensus from economists seems to be that Brexit is bad for the UK and the EU, the Brexiteers would of course suggest that economists have got it wrong in the past!

As we approach the vote I think the pound is going to continue to struggle massively against all currencies particularly if the polls are suggesting that the vote will go the way of the Leave camp. Now is not the time to be complacent about any outcome as a Remain or Leave vote could spell further problems for other currencies.

The Euro could really struggle from a Brexit as the UK leaving would pave the way ahead for further Referendums in the EU. A Brexit will only serve to highlight the weakness politically in the EU and the Euro is the currency mostly used by EU nations. If you are holding Euros hoping a Brexit could present some very good opportunities to buy pounds there are no guarantees this will be the case.

The US Dollar would also be under pressure since the Federal Reserve have linked the raising of interest rates to the outcome of the Brexit. Therefore if the UK votes for Brexit the prospect of a US rate hike diminishes which would see the USD weaken. There is a flipside argument of course. Brexit could lead to the US Dollar strengthening, in the midst of much uncertainty on financial markets the US Dollar would strengthen as it is a safe haven currency.

The pound is likely to rise significantly on a Remain vote whilst struggling on a Leave vote. Making firm predictions is impossible but the pound moved nearly 1.5% yesterday and at times was moving over half a cent in seconds as investors were struggling to make sense of the latest news.

If you have a transfer to make leaving any decision or plans until next week could be too late. For more information on the best course of action and how to maximise your transfer please email me Jonathan on [email protected]