27 June, AtoZForex – Interestingly, George Soros who was almost spot on about his analysis and the potential effect of a UK fallout from the European union, did not profit from the pound crash. Therefore putting George Soros profit from Brexit on the pound crash at zero. Having earned the alias as “the man who broke the bank of England,” this time, Soros did not profit from the largest single day crash in the sterling after the Brexit vote sent the currency crashing about 10 percent.
A spokesman for Soros said:
"George Soros did not speculate against sterling while he was arguing for Britain to remain in the European Union," "In fact, he was long the British Pound leading up to the vote."
However, the billionaire investor did profit from other bearish trades because of the Brexit result.
George Soros Brexit warning
Before the referendum, Soros forecast that the pound could fall as much as 15% and possibly more than 20% in the event of a Brexit given the expectations implied by the market pricing at present. However, unlike the beneficial scenario of the 1992 “Black Wednesday” incident when the Bank of England chose to devalue the currency to relieve it of its obligation to ‘defend’ the overvalued pound, the potential effect of a Brexit “Black Friday” Brexit effect will have a damaging aftermath.
George Soros profit from Brexit
In fact, the daily range for the GBPUSD has passed over 10 cents (1000 pips), while the move in GBPJPY surpassed 1500 pips. Also, the pound dropped about 10 percent after the Brexit “Black Friday” votes, as compared to a 4% drop on “Black Wednesday.”
Soros further warned that the EU risks irreparable damage to the union and a possible eventual break-up, saying that:
"Britain eventually may or may not be relatively better off than other countries by leaving the EU, but its economy and people stand to suffer significantly in the short to medium term.”
Salient points raised by Soros about the negative effect of Brexit includes:
- With interest rates at a record-low 0.50%, the Bank of England couldn’t cut rates in response to a currency shock.
- The UK’s current account deficit makes it dependent on foreign capital, which could dry up in the event the left camp wins.
- A post-Brexit devaluation of the currency would be unlikely to benefit British manufacturing exports as the cheaper pound did in 1992.
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