U.K. stocks and ETFs are dealing with sterling weakness. For example, the iShares MSCI United Kingdom ETF (NYSEArca: EWU), the largest U.K. ETF trading in the U.S., is up 3.3.% this year.
Currency hedged ETFs, including the iShares Currency Hedged MSCI United Kingdom ETF (NYSEArca: HEWU), WisdomTree United Kingdom Hedged Equity Fund (NasdaqGM: DXPS) and Deutsche X-Trackers MSCI United Kingdom Hedged Equity ETF (NYSEArca: DBUK), are benefiting from sterling weakness.
Other issues could confound sterling, too.
“The threat of another Constitutional crisis with referenda in Scotland and possibly Northern Ireland, in parallel with Brexit negotiations with the EU, may sap confidence in the outlook for sterling assets. If in one way or another the threat of a referendum helps to extract concessions for Scotland/NI and softens the overall hard Brexit tactics of the UK government, then this could cushion another fall in the GBP,” according to a Societe Generale note seen in Barron’s.
For more information on the GBP, visit our British pound category.