FTSE boosted by falling pound
Fall in pound has boosted FTSE100
This week (starting 10th October) the FTSE100 rose to its highest level due to a dramatic fall in the pound, before falling back just before close of market.
The fall in the pound came about by even more worries about how Brexit will affect the economy.
The pound’s fall to below €1.11 and $1.23 led to the FTSE100’s rise because a lot of the companies generate a considerable amount of their revenues through foreign investors – a lower pound means cheaper shares.
It’s not looking too great for the Euro either
However, the Euro didn’t come out unscathed. It dropped to a two month low against the dollar, down 1.1% from the beginning of the week.
Even more Brexit worries
As if a less valuable pound wasn’t bad enough, leaked Government documents revealed that the Treasury could lose £66 billion or more a year.
Could foreign investors leave the UK?
There is also a fear that foreign investors will leave the UK – this week, there was a worrying report that VTB, the Russian bank, could leave London and take its European hub elsewhere.
Who is affected by the falling pound?
The drop in the pound could lead to higher inflation, brought about by increased costs for food and fuel imported from abroad. This could, in turn, affect the current predicted 2% rise in incomes, since any pound earned will be worth less.
A falling pound will also make things more expensive for those travelling abroad.
Does a falling pound benefit anybody?
The falling pound is, however, good news for some. Exporters could benefit from their goods being cheaper for foreign buyers.
While those travelling abroad from the UK will be hit by the falling pound, the UK should see a boost to its tourism industry because it will be cheaper for people to visit.
Keep your finances secure no matter the economy
While the fall in pound might seem all doom and gloom, there is still plenty you can do to ensure your finances are as secure as possible, no matter how well, or badly, the UK economy is doing.
Call Oracle now on 020 7112 8842 or request a callback to speak to an independent adviser about how we can help.
The value of your investments may fall as well as rise.