Currency woes as GBP hits New-Low
For those of you who dabble in the markets or like to try their hand at a bit of spread betting on the side, this volatile change in the Sterling value may be a great asset for you, but for those stay-at-home Brits who have been saving up for their next annual holiday to Europe or America, it may be the start of a whole new problem.
With the potential exit of Great Britain from the EU looming, the pound has plummeted to since Sunday from $1.424/£1 to $1.389/£1 reaching a new 7-year low. Other currencies have seen the same short-term victories against the GBP and the onslaught looks set to continue until either the market regains confidence in the currency or the Referendum in June is held. But just what does this mean for average Joe who isn’t interested in playing the markets?
For most of us, the thought of a trip to New York or a weekend break in Paris has always been a pleasant one, cheap shopping and great sightseeing followed by a show or two. But with the value of the Pound now getting weaker by the day, are Brits going to enjoy the same bargain buys that they did last year at $1.54/£1 or even 2014 when it was $1.66/£1? The difference now in buying a $100 item, now £72, is as much as £7.07 from last year and £11.76 on 2014! While that may not seem like a lot to some, for the masses that can make a huge difference on the overall budget with items now 20% higher than 2 years ago.
So what happens next? Well with the FTSE100 sliding again amid Saudi Arabia’s refusal to cut oil output and the Pound getting hit, it could cause havoc to pension investments and lead to yet more redundancies across the country. But Brits need not worry yet as with Petrol/Diesel at an all-time low thanks to a year of tumbling prices and household bills falling; most are enjoying the extra savings. After all, unless you were already planning a Bank Holiday or Easter getaway abroad, then the immediate effects of all this market volatility is unlikely to really hit you. What’s more, for those of you who are fortunate enough to work for a European or US firm or run a Global-facing online business, your bonuses may even work out to be higher than before thanks to the currency adjustments.
So in the meantime, while we keep an eye on the market place and secretly scorn at those making money on the markets or enjoying the low-Pound abroad, the likelihood is that the Pound will recover once Great Britain makes up its’ mind on the true meaning of ‘Brexit’ and chooses a side to take up. For now, the masses can continue to enjoy their normal lives and if hard-pressed financially, even consider taking a holiday at home and checking out some of the places in the UK that they can go to … just maybe avoid Ireland if you don’t want to start losing to the Euro.