Economics
With so much still up in the air regarding Brexit, making predictions is difficult – particularly about the future. But we can prepare for a range of different outcomes and market environments, pruning our ‘probability tree’ as events evolve. Here’s our latest scenario analysis.;
Economics
In a surprising result, the general election has ended in a hung parliament. At the time of writing, the Conservative party has won approximately 318 seats. Labour is at 261, the SNP 35, the Liberal Democrats 12 and the DUP 10. UKIP did not win any seats. When Theresa May called the snap election in mid-April it was hers to lose, with the Conservatives leading Labour in the polls by around 20 percentage points – the highest since the early 1980s – which could have yielded a majority of circa 100 seats. In the event, the gamble has failed to pay off, and the governance of the country hangs in the balance.;
Economics
The Scottish independence referendum in September 2014 was billed as a “once in a generation” event. Two and half years later, and we are now faced with a possible second vote. The politics of the case for independence may have been shaken up by the UK’s decision to leave the European Union, but the economics have also been shaken up by the collapse in oil prices.;
Currency
The GBPUSD real exchange rate is now 25% below the average of the last two hundred years. It has become increasingly common for currency strategists to talk about GBPUSD trading at parity (i.e. another 20% below current levels). At that point, the pound would be even weaker than just before the Battle of Waterloo.;
