24 September 2019

Sterling volatility continues as UK runs out of options

4 min read

Margherita Orlandini, Corporate PR Manager, Royal London
Margherita Orlandini

Corporate PR Manager, Royal London


Commenting on the UK Supreme Court’s ruling that the prorogation of Parliament was unlawful, Trevor Greetham, Head of Multi Asset at Royal London Asset management said:

“It’s unclear what happens next and this remains a fast moving situation. Those mapping out the options soon run out of paper and are forced to make constant updates and adjustments (see diagram below, for example).

“Against this backdrop, we expect sterling volatility to remain at a heightened level for the foreseeable future. We are tilted towards foreign currency exposure in our funds, though less so than earlier in the summer given the reduced risk of a no deal Brexit. We continue to recommend a diversified approach, including assets that are likely to do well in a range of possible Brexit scenarios.”    

“The government could yet gain parliamentary approval for a Withdrawal Agreement in time to leave with a deal on 31 October or they could try to leave without a deal on 31 October. They could ask for an extension to hold a general election or confirmatory referendum, or this could be done by a cross-party “government of nation unity” after a vote of no confidence. It would be very hard to predict the outcome of a referendum or general election fought as a proxy second referendum with No Deal and No Brexit options among the manifestos on offer.”

Source: John Worth, College of Europe, Bruges. The options shown and probabilities attached to them are reflective of his analysis and not those of RLAM.

About Royal London Asset Management (RLAM):

Established in 1988, Royal London Asset Management (RLAM) is one of the UK's leading fund management companies, providing investment management solutions to both wholesale and institutional clients such as not-for-profit organisations, local authorities and the insurance sector.

RLAM manages £148 billion of assets and employs 121 investment professionals as at March 2021. It invests in all major asset classes including UK and overseas equities, government bonds, investment grade and high yield corporate bonds, property and cash.

For professional clients only, not suitable for retail investors.

Issued by Royal London Asset Management Limited, registered in England and Wales number 2244297; authorised and regulated by the Financial Conduct Authority. Registered Office: 55 Gracechurch Street, London, EC3V 0RL.

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Margherita Orlandini, Corporate PR Manager, Royal London