Globally facing portfolios have fared well in the year to date in Sterling terms, despite the extent of political uncertainty in developed markets. It is important to recognise that a large part of this has been driven by currency movements leading up to and following the Referendum. Basically the weakness of Sterling favoured returns being translated from other currencies. This can clearly be seen in the data presented below for US, Asian and European indices in both Sterling and local currency terms.
In the three months since the Referendum there was little detail on the government’s position regarding Britain’s exit from the European Union. After its dramatic devaluation in the initial period after the vote, the Sterling exchange rate to the US Dollar firmed a little in August, but weakened incrementally across September. The S&P 500 made a modest loss in US Dollar terms in September and more muted currency translation effects were only sufficient to create a modest gain of 0.8% in Sterling terms.