A UK government party advocating lower taxes, lighter regulation and an end to austerity could be substantial positive for sterling which has weakened by over 6% since February and almost 17% since its pre-referendum level. Yet a change in tone, mood and momentum can only take the sterling bulls so far. What sterling backers would want to see is a real chance that this government and its policies will endure. In normal times, one would have to be sceptical. Since 1987, right-wing manifestos have not met with success when presented to the British electorate. However, these are not normal times. Populism is on the march as Brexit up-ends party affiliations and in Boris Johnson, the Tories have a master of empathy-politics and the agreeable slogan.
We continue to encourage investors to ensure their financial planning investment strategy is aligned with the risk they can tolerate. Please get in touch with your financial planner should you want to discuss further.
Julian Broom, Chief Investment Officer
Source – Purple Asset Management