UK

The joker's wild and hurting the pound

By John Smith Monday, 22 February 2016 17:20 1 comment
David Cameron and Boris Johnson before the announcement. David Cameron and Boris Johnson before the announcement. © Number 10 Crown Copyright flickr

ALTHOUGH often portrayed as a bit of a buffoon, the very astute Boris Johnson is being taken seriously by currency markets, especially in the USA, and his bombshell announcement that he would back a British exit from the European Union has actually hurt the already weakening pound.

According to the Mayor of London, the financial advantages of leaving the Union will far outweigh any advantages of remaining and he is taking a massive gamble with his own political future as many commentators believe that he has thrown his hat into the ring as the potential next leader of the Conservative party.

If as he believes, Britain does vote to leave the Union, then it is more than likely that David Cameron will do the honourable thing and fall onto his sword, resigning as Prime Minister and leaving the way open for Boris to fight with other pro-Brexit campaigners such as the generally disliked Michael Gove or failed former leader Iain Duncan Smith.

Whilst he is far shrewder than he is often given credit for, it is just possible that he underestimated his own power to hurt the pound although now the credit analysts Moody have come out and said that the cost of leaving will almost certainly outweigh the cost of remaining.

They also forecast that until such time as the referendum is held and the future of the United Kingdom is known then sterling will remain in the doldrums against both the euro and the dollar. 

As an added worry, it is also rumoured that in the event that the majority of England votes to leave and the majority of Scots vote to remain then the SNP will demand another referendum on Independence which in turn will keep the pound in the doldrums even longer.

The one consolation is that whilst the pound is hovering around the €1.3 mark, it hasn’t dropped to almost par which it did fall to several years ago.

Comments (1)

  1. Brian Eagleson

Careful. The pound has actually fallen by 15% against the dollar over the past 18 months. Boris only made his announcement on Sunday! It is now near the level it was at when Cameron and Osborne took office at the beginning of their first term 6...

Careful. The pound has actually fallen by 15% against the dollar over the past 18 months. Boris only made his announcement on Sunday! It is now near the level it was at when Cameron and Osborne took office at the beginning of their first term 6 years ago!<br /><br />I appeal to the EWN please do not get drawn into the lie-making propaganda machine fostered by the politicians. This is much bigger than Boris (even though he's a big lad!) He's just a small cog in a much bigger wheel. The real threat to the pound is whether or not world investors believe the British economy is robust enough to go it alone. That's been going on for some time now, not just this weekend. It's been going on ever since Cameron made his initial announcement that there would be an in/out referendum in the first place. The little spike in the Pound v. the Euro recently was because of the Greek crisis and it's damaging effect on the Euro. Now that the Greek problem has abated (a tiny little bit!) the pound is on the slide again.<br /><br />Incidentally I'm only writing this out of a sense of fairness. I'm not a Boris supporter by any means! I just like to make sure the wider truth is not obscured by lying politicians - on all sides.

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