Why a weak pound is huge opportunity for investors

Yesterday, amid threats of a no-deal Brexit looming, the British pound sank again, reaching its lowest level in 28-months against the US dollar.

As the UK government moves Britain closer to a no-deal Brexit, newly appointed Prime Minister Boris Johnson is making headway for the UK to leave the EU without a deal on October 31, with senior cabinet members predicting a no-deal Brexit as ‘a very real prospect’.

Newly appointed Foreign Secretary Dominic Raab announced yesterday that the only way for a deal with the EU to be achieved is if its position on the Irish backstop changes. The Irish backstop is a topic that’s sat at the helm of Brexit discussions over the last year, becoming somewhat of a sticking point in the way of any deal being made. The Irish backstop refers to the lack of agreement on the border between Northern and Southern Ireland. As a result of this no-deal Brexit reality, it was our darling sterling that paid the price, falling heavily by 2.4% since Monday.

Whilst it’s bad news for holidaymakers hoping to get a good deal on foreign currency, it’s a great opportunity for investors outside of the UK to take advantage of a weaker British pound.

Opportunity for investors from outside the UK

When Britain voted to leave the European Union in 2016, it opened up the single biggest oppor­tunity for international investors, due to the weakened position of the British Pound. In comparison to the USD, Sterling has weak­ened by approximately 15%, making property 15% cheaper for investors with funds in a foreign currency. The 2.4% drop since Monday, means this opportunity is even more lucrative than it was before.

Whilst other investment sectors have suffered during this political volatility, the property market has blossomed. Investors are seizing opportunities to acquire assets that deliver huge returns, at a significantly reduced price because of sterling devaluation. This currency window of oppor­tunity won’t last forever, once Britain leaves the EU, either with a deal or without one, the British Pound will regain its losses against the US dollar.

If you’d like to hear more about our investment opportunities, get in touch to find out more.