The Pound trades near three years low against dollar and trades near two years low against the Euro. Now, whether the Pound will parity with Euro?
Boris Johnson the new UK Prime Minister has started campaigning for hard brexit. But most of the experts are predicting if Boris sticks to hard brexit the Pound will have parity with Euro. Rather, if Boris by changing his mind goes for a softer brexit then the Pound will move higher or calling for an earlier election will push the Pound higher.
A hard brexit deal will also make the inflation rate move higher and therefore the Pound will tumble down further. The investors also shifted their investment from Pound to Euro or other currencies on the stand by Boris Johnson for hard brexit. Even the option investors perception also shows that the Pound will decline in effect of hard brexit.
Impacts of Pound – Euro parity:
If Pound parity with Euro, tourists will visit England and this will increase the restaurant business, retailers and leisure attractions. It also attracts the foreign investors for investing in UK and moreover the exports will increase as people will purchase goods as the Pound value is low.
In other way, the people in England have to think for foreign trips as their currency value becomes low. The business people and retailers can’t import goods and therefore they will struggle to run certain businesses. Banks also face problems on exchange value but home sales and loan business will pick-up but when the Pound recovers the banks will suffer to recover the loans.