In April we noted the uncertainty that a Brexit vote would bring to the British economy.
In this post, we examine how the economic risk the UK now faces may be manifested in a post-Brexit UK. In particular, we look at a “worst case scenario”, and what this might mean for the economy, and the currency.
Sterling’s deprecation since June this year has been dramatic and many commentators have welcomed this as a way to rebalance the economy via an improving trade balance. However, this may not be the first and foremost mechanism presently at work : instead, we argue that the income balance is perhaps more important and the key adjustment mechanism in a world where trade responsiveness to currency changes is less than in the past.
Do market capitalisation driven weights make sense from a currency perspective? If not, how can we go about getting closer to a more balanced and optimal currency mix as part of international asset allocation?
The US dollar is at an inflection point. Can the dollar’s cycle continue in the face of convergent economic fundamentals and central bank coordination?
Following the attempted coup in Turkey on 15th July, we examine afresh the pressure points in the Turkish economy, and note three themes investors will be watching with interest.