NEWSFLASH: Losses Forecast for Pound Sterling GBP on Corbyn Labour Leadership Victory

September 14, 2015 - Written by David Woodsmith

STORY LINK NEWSFLASH: Losses Forecast for Pound Sterling GBP on Corbyn Labour Leadership Victory

Labour Leadership Election Sees Pound Sterling Exchange Rate Decline

The main point of interest during the weekend currency market shutdown, from the perspective of Pound Sterling holders at least, came in the form of the announcement that Jeremy Corbyn MP had been elected the new Labour party leader.

The Pound Sterling has performed with credit sine the 2008 / 09 global financial crisis and the UK economy is generally adjudged to be ahead of the curve the curve in comparison with those of other developed nation’s thanks to the ‘sound money’ style of economic policy followed by the current Conservative government and the erstwhile Conservative-led coalition.

Brexit Fears Rise, GBP Conversion Rate Struggles against EUR, USD Today

The Conservative’s anti-austerity policies have played well with investors and the opposition Labour party’s ‘austerity light’ platform provided an alternative which the markets viewed as a relatively benign second best. However, this set-up changed dramatically 12 hours after Friday’s market shutdown when left-wing firebrand Jeremy Corbyn was elected the new de facto leader of the opposition in Westminster. Corbyn set out the principles which will inform his leadership during his acceptance speech in a London pub on Saturday afternoon, stating that,

‘My job is going to be a complicated one...a campaigning one, uniting, I hope, people in a common endeavour to bring about the decent socially just society we want... challenging the idea austerity, caused by a banking failure, should be paid for by the poorest and most vulnerable in our society.’

Corbyn’s anti-austerity, anti-trident policies echo those of the Scottish National Party which enjoyed tremendous success in May’s UK General Election, winning all but two of the seats available North of the Border. Corbyn’s ascension to the leadership greatly increases the chances that the UK will drop its anti-austerity path at some stage during the next five years.

Corbyn Victory Forecast to Pile Pressure on Pound Sterling to US Dollar Exchange Rates, Returning to Best Rates Unlikely

Analysts forecast that the prospect of such an outcome will provide the Pound Sterling with a considerable headwind in the medium-to-long term, potentially sending the Pound Sterling US Dollar exchange rate back down into the 1.3000s GBP USD and the Sterling to euro exchange rate back down into the 1.2000s GBP EUR.

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