The pound fell 0.4% against the US dollar shortly after 10am this morning (April 18), when May revealed she would make an unscheduled statement on the steps of 10 Downing Street at 11.15am. The government was said to have remained tight-lipped over the reason for the statement.
The pound recovered quickly after the prime minister announced the snap general election. As of 11.13am, sterling was 0.1% stronger than the initial dip.
The prime minister said an election would be the only way to bring “certainty and stability”.
May said: “I have concluded the only way to guarantee certainty and stability for the years ahead is to hold this election and seek your support for the decisions I have to make.”
Meanwhile, leading food manufacturers have complained that currency factors have hit profits.
2 Sisters Food Group last month blamed currency fluctuations on its 17.8% drop in like-for-like operating profit. 2 Sisters blamed its falling profit margin on the challenging markets in the wake of the Brexit vote.
In February, Snack foods giant Mondelēz International also blamed currency volatility on its £2.9bn fall in revenue last year.
Elsewhere, UK cereal manufacturer Weetabix warned of price rises in January, due to currency fluctuations. The weak value of sterling since the UK’s vote to leave the EU had boosted ingredient prices, because wheat is priced in dollars, it said.
How the industry responded to the snap general election
- “The debate around Brexit will be centre-stage, and we will be highlighting the key issues facing the sector. In the hospitality industry, we need to continue to attract those with the right skills, and keep trade with our neighbours as free as possible. Brexit also presents an opportunity to encourage the new government towards a more favourable tax regime, especially for beer duty. We will not hesitate to use the election to highlight both the challenges and the opportunities for brewing and pubs.”
Brigid Simmonds, British Beer & Pub Association