Uncertain times lead to uncertain markets

9th June 2017

The Author: David Cooper
Financial strategist, investment adviser and Sales Director for United Advisers

Following what now seems to be a political tradition, the UK election result was a shock to voters and markets alike. The Labour seat gain is largely down to youth turnout. Whilst the overall turnout was only 2% higher than 2015, 72% of young voters hit the poll booths yesterday.

The pound dropped immediately as the election exit poll was released as investors realised that a hung parliament was a likely outcome. This is worrying for expats who rely on a UK pension or salary who have already suffered under a weakening pound. However, some have predicted that the pound may rally towards the end of the week as a ‘softer’ Brexit may become a possibility if May is out of the picture.

The political editor from the BBC tweeted that May was ‘not going anywhere’ despite the fact that the Conservatives look set to claim only 318 seats. The uncertainty of the government has left markets anxious.

So what should you do if you are concerned about your investments or income?

As we saw with the dollar after the Trump election, currency can be particularly unstable as markets try and ascertain the future economic performance of a country based on policy. The hung parliament adds another layout of uncertainty around the UK and its economy. It would therefore be unwise to make knee-jerk sales of assets or to change your investment portfolio whilst the May and Corbyn are in their negotiation process.

If you have a pension in pounds and are living abroad then you may want to consider transferring this to Euros to secure your income against the likely fluctuations of coming months. If you have a pound based salary or are considering a large purchase abroad then we would recommend fixing an exchange rate with a broker, such as IFX, to protect against any further falls.