OP 2019: Prime Minister Corbyn sends GBPUSD to parity
Summary: Two years of agonised Brexit debate sees a staunchly leftist Corbyn government sweep into power and impose old-school policies that cut the ground from under the British pound.
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After serving in the most challenging and thankless prime ministerial role since
Winston Churchill, Theresa “The Cat” May finally runs out of her proverbial nine lives
and her Frankenstein of a Brexit deal is dead on arrival in the UK parliament as the
March 29 Brexit deadline rolls into view.
This forces a delay of the Article 50 expiration date and snap UK elections. The
Conservative party splits down the middle over Brexit with a third of their number
mounting a doomed charge of the “Sovereignty or Death” brigade. Labour sweeps to
a resounding victory and names Jeremy Corbyn as prime minister on the promise of
comprehensive progressive reform and a second referendum on a “ to-be defined”
With a popular mandate and strong majority in Parliament, the Corbyn Labour
government embarks on a mid-20th century-style socialist scorched earth campaign
to even out the UK’s gross inequalities. New tax revenue streams are tapped into as
Corbyn brings the UK’s first steeply progressive property tax in to being to soak the
wealthy and demands the Bank of England help finance a new “People’s quantitative
easing”, or universal basic income.
Utilities and the rail networks are re-nationalised and fiscal expansion sees deficits
yawn wider to the tune of 5% of GDP. Inflation rises steeply, business investment
languishes, and non-domiciled foreign residents run for cover, taking their vast wealth
Sterling is crushed on the double trouble of ugly twin deficits and lack of business
investment on the still-unresolved Brexit issue. Cable goes from the 1.30 area where
it spent most of the second half of 2018 and all the way down to parity at 1.00, a
move of over 20% - with one dollar being equal to one pound for the first time ever.
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.
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