Soros warned sterling would “decline precipitously” if the Vote Leave campaign triumphs in the European Union referendum and said Brexit would be even more destructive than Black Wednesday in 1992, when Britain left the ERM – and Soros made a fortune betting against the pound. A “Leave” vote would decrease the pound’s value “precipitously”, the banker predicted in the Guardian , with dramatic effects on the financial markets, investment, prices and jobs.
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Compared to 1992, “there are speculative forces in the markets much bigger and more powerful”, Soros warned.
Writing in the Guardian newspaper today, said: ‘Sterling is nearly certain to fall steeply and quickly if Leave wins the referendum.
The day after the referendum, the pound will either sink to the lowest level in more than three decades or climb toward the highest this year, according to a Bloomberg survey of economists.
George Soros says pound fall after Brexit would be bigger, more disruptive than ‘Black Wednesday’Soros used Quantum Fund in 1992 to bet successfully that sterling was overvalued against the Deutsche Mark, forcing then-Prime Minister John Major to pull the pound out of the European Exchange Rate Mechanism (ERM).
Third, a post-Brexit devaluation is unlikely to produce the improvement in manufacturing exports seen after 1992, because trading conditions would be too uncertain for British businesses to undertake new investments, hire more workers or otherwise add to export capacity… He reportedly made a billion dollar in that trade.
The pound surged the most since 2008 on Monday, spurring a global rally in higher-yielding currencies, as polls signalled the campaign to remain in the European Union was gaining momentum.
Soros, whose net worth is estimated at $24.9 billion, said he did not expect the Bank of England to cut interest rates after a Brexit and that the government would have few monetary policy tools left to stave off a recession of a drop in British house prices.
In Hong Kong, speaking with Bloomberg TV, Hong Kong billionaire Li Ka-shing stepped up his calls for Britain to remain in the European Union, saying “if Brexit happens, it will be detrimental to the United Kingdom and it will have a negative impact to the whole of Europe”.
Soros’ predictions became even more dark as he said that it could lead to another crisis which would have serious after-effects for a lot of people.
However, yesterday the pound made its biggest gains in almost eight years as polls indicated a recovery of the Remain campaign. And they will be eager to exploit any miscalculations by the British government or British voters.
“There is a lot of uncertainty with the Brexit vote and “Remain” is not a given yet”.
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But Vote Leave dismissed Mr Soros’s claims as scaremongering and said he had a track record of getting things wrong.
