CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved.

Sterling volatility in UK markets expected after Brexit-fueled Theresa May no-confidence vote

The pound was previously at its lowest point since Brexit was passed in 2016.

IG Analyst

Publication date : 2018-12-12T17:00:00+0000

British pound

Source: Bloomberg

Brexit has greatly affected the sterling. The British pound is at its lowest point in two years and more volatility is expected after the no-confidence vote against UK Prime Minister, Theresa May.

Sterling had been rising until May’s decision to cancel a vote on Brexit. Since the decision earlier this week, the pound has fallen to $1.2490. However, the pound has recently rallied after the no-confidence vote. That may be an indication that the markets expect May to remain prime minister, even though she vowed to step down before the 2022 election.

What economists believe about sterling

Economists like, Kallum Pickering, senior UK economist at Berenberg, believes that the UK’s economic volatility will hurt the pound in the long term.

‘Higher volatility lowers sterling — that's been the story over the last two years. In the long-term, I think sterling is still undervalued. But in the short-term, the risks are decidedly tilted to the downside,’ said Pickering.

FTSE 100 rises despite volatility

Despite the turmoil, the FTSE 100 rose at the end of the trading day on the strength of China cutting tariffs on imported cars. However, the markets also possibly stabilized on the expectation May would still be prime minister after the vote. After May won her no-confidence vote, the sterling rose 1%.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IG Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.

Find articles by writer

Disclaimer:

All forms of investments carry risks and trading CFDs may not be suitable for everyone. CFDs are leveraged instruments and can result in losses that exceed deposits, so please ensure that you fully understand, and are aware of, the risks and costs involved. Refer to the Risk Disclosure Statement and Risk Fact Sheet.

IG Asia Pte Ltd (Co.Reg.No. 200510021K) is regulated by the Monetary Authority of Singapore and holds a capital markets services licence for dealing in capital markets products that are over-the-counter derivatives contracts and is an exempt financial adviser.

IG provides an execution-only service. The information in this advertisement does not contain (and should not be construed as containing) investment advice or an investment recommendation, or an offer of or solicitation for a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. You should consider your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

The information on this site is not directed at residents of the United States or Belgium and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

This advertisement has not been reviewed by the Monetary Authority of Singapore.