What does the UK election result mean for the markets – and how should you respond?

The result of the UK general election has delivered plenty of shocks, not least to Prime Minister Theresa May’s plans for a hard Brexit. In the aftermath of the hung parliament, the country is now wondering what combination of politicians will lead us into an uncertain future outside the European Union. The only thing that’s definitive is that we are a nation deeply divided on the most important issues of our time.

A new low for Sterling

Inevitably, the impact of this instability hit the pound first, with Sterling taking a 2.5% downturn. This was an eight-week low against the dollar and seven-month low against the Euro. However, the pound has started to bounce back in the days following the election and seems to have recovered some form as the Conservative Party secured a coalition with Northern Ireland’s Democratic Unionists Party (DUP) in order to stay in government. Some analysts view talk of a softer approach to Brexit to be good news for the pound in the long term, but only after it stabilises following this latest bout of political upheaval.

The FTSE 100 rises

The weak pound continues to be good news for companies operating with big overseas earnings. Certainly, investors who can make large returns by exchanging their profits into stronger currencies have found the current situation attractive. The news isn’t as good for companies who rely on UK spending power. The news this week is that inflation is at a four-year-high and now stands at 2.9%. A squeeze on wages is likely to see British households tighten their belts, and decreased spending is likely to hit those businesses hard. On top of that, some of the FTSE companies that rely on tourism trade have also reported a dip in their fortunes, as potential tourists worry about the terrorist threat following atrocities in Manchester and London.

The pragmatic approach

Understandably, the numerous question marks over the UK’s future and the impact of global politics have provoked panic. But when it comes to your money and where it is best to place it, it’s important to take a long-term view. A diverse portfolio is vital, as your financial advisor spreads the risk and looks at funds that perform consistently well. There is also a view that adding defensive investments in cash and gold may be a smart move. However, it is advisable that you consult your financial advisor and find out the strategic moves you need to take in order to deliver the results you want.

At Moyes Investments, we offer a service that is proactive and agile, thanks to our discretionary fund management status. If you want to discuss your portfolio and how we can help your investments work for you, please get in touch. You can’t rely on politicians to deliver on their promise to be ‘strong and stable’, but you can count on our team to be consistently dynamic in finding the right opportunities for you.  Call us on 01638 429975 or email [email protected] to discover how.


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