Expect the British pound to soar above predictions to $1.40, billions of pent up business investment to be unleashed to boost UK financial assets and the FTSE 100 to open stronger before paring back, as Boris Johnson’s Conservatives secure an impressive majority in the UK general election.
But there are many serious challenges ahead, warned the CEO of one of the world’s largest independent financial advisory organizations.
Nigel Green, chief executive and founder of deVere Group, comments: “The pound has enjoyed its biggest surge in a decade on the hopes that a solid Conservative majority can finally end the Brexit deadlock.
“Many traders were caught off guard by the size of the majority and this may push the pound even higher than previous predictions. We could see bullish traders now take it to $1.38 or maybe even as high as $1.40.”
He continues: “With more political certainty due to the large majority, the UK economy is also likely to receive an election bounce.
“Billions of pounds in business investment that has been on the sidelines due to the parliamentary paralysis is now ready to be unleashed. This will give a much-needed boost the slowing British economy.”
He goes on to add: “The UK’s FTSE 100 will open higher on Friday morning. However, this is likely to be a positive knee-jerk reaction, with some gains likely to be given up throughout the day as most FTSE companies earn in dollars and the pound is stronger.”
The deVere CEO also offers a cautionary caveat: “It now looks more likely that Boris Johnson will indeed be able to ‘get Brexit done.’
“His party’s large majority in the Commons helps him pass his Brexit deal and it gives him more political sway when negotiating the UK’s future relationship with the EU and reducing the risk of no-deal at the end of 2020.
“However, there’s still a long way to go. Mr Johnson’s self-imposed end of December 2020 deadline is a mammoth challenge, and a no-deal Brexit is still possible on January 1 2021.
He adds: “The result election also puts a question mark over Scotland’s future in the United Kingdom. The SNP’s gains will embolden them in their key aim of securing Scottish independence.
“Mr Johnson’s monumental task to deliver Brexit with a deal and the Scotland issue will continue to fuel uncertainty in 2020.”
Mr Green concludes: “Boris Johnson’s election gamble has paid off. Christmas has come early for the pound, the British economy and UK financial assets.”
UK financial assets Image by Thanks for your Like • donations welcome from Pixabay
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