Brexit: Negotiations Get Nasty; Economy Remains Strong
The British pound has weakened against the dollar after Theresa May, Prime minister of the U.K, suggested that European Union officials are trying to sabotage Brexit by influencing the snap election scheduled for June 8th. On top of that, the EU appears to be taking a hard line in the Brexit negotiations by demanding an upfront payment of 100 billion euros
The British pound has fallen against the dollar in response to these challenges. However, the pound remains strong against the euro due to continued uncertainty over the election in France. Le Pen is expected to lose to Macron, and if this occurs, there will be further weakness in the British pound. Physical gold may be a good hedge against these challenges.
United Kingdom GDP Data
Generally, the British economy – along with the U.S and continental Europe - has performed well in the months after the Brexit vote. But in the first quarter of 2017, the U.K mirrored the U.S’s soft GDP growth by only increasing 0.3%. This was slightly below expectations and caused concerns about slowing economic growth. However, fears of an economic slowdown in the U.K have been pushed aside by superb manufacturing growth driven partially by overseas demand. Britain’s manufacturing sector makes up a tenth of the U.K economy and can be expected to benefit substantially from the historic weakness in the pound.