Strengthening pound after post-Brexit shock.

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Strengthening pound after post-Brexit shock.

Months after UK’s shocking vote for Brexit, the sterling pound is gaining ground against the Euro. It is also holding well against the US dollar despite the dollar’s bullish run. This follows an announcement by Philip Hammond, UK’s chancellor that the United Kingdom would increase spending in more productive areas of the economy. In the coming months, a lot more pounds will be directed to improving infrastructure and to innovation. Philip Hammond aims to increase this spending by borrowing to fund the new National Productivity Investment Fund and to boost the R and D innovation fund. The pound is also growing stronger is because of the forecast of an imminent increase in interest rates. Investors are buying pounds causing an upsurge in its value. So how will the strengthening pound affect overseas transactions? Let’s examine a few sectors.

Exports and imports
For exporters, a strengthening pound means their products are likely to be very expensive. Businesses looking to break into new foreign markets will find it difficult. For exporters already selling in foreign markets, it means that they will get a higher profit margin for the few goods that will they sell.
Importers from Eurozone into the UK on the other hand, are going to have a field day. Imports from Eurozone into UK are likely to be cheaper and this will drive purchase up. Imports and exports between US and UK will have little change in price value. This is also good news for some manufacturers since the imported raw materials will come in at a cheaper rate too.

Holidaymakers from the UK traveling to Eurozone and other destinations around the world will spend less than they anticipated spending. On the other hand, those looking to holiday in the UK will find everything a little bit more expensive, from food to hotel rooms to souvenirs. Now would be the time for UK citizens to take that tropical island tour. Those looking to make merry in the UK will need to set aside more money.

Buying property overseas
Those looking to buy property in the UK from the Eurozone will contend with higher prices. Mortgages are going to cost a bit more and interest rates are set to be slightly higher. For those looking to sell property in the UK, now would be the best time to cash in. Sellers are likely to get a huge profit. On the other hand, UK citizens looking to buy property in the Eurozone will have it easier since they will find that the prices are slightly cheaper.

Forex Trade
One of the most profitable pairings in forex will be those that pit the Sterling pound against weaker currencies. A buy of pound vs. euro will bring the trader a good amount of money. A trade of euro vs. pound is likely to bring one significant profit too.
A strong sterling pound against the Euro is going to affect business depending on which part of the world the business is being carried out. Those looking to make transactions overseas should look out for price and profit changes in exports, imports, packaged holidays and forex.

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