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Falling pound symptom of Brexit uncertainty

The pound plunging in the aftermath of the shock Brexit result was perhaps not a great surprise and Leave campaigners were quick to assure the public that it would all settle down fairly quickly.

However, sterling has turned out to be a barometer of the uncertain political landscape in the wake of the June 23 vote to leave the EU.

It fell again earlier this week after Theresa May indicated her government was heading for a hard Brexit, with talks due to begin in March next year.

Then on Thursday night came the `flash crash' in the Asia trading session, with the pound dropping dramatically to a fresh 31-year low before recovering.

The sharp and unexpected fall is being blamed on a `rogue algorithm' which seems to have picked up on negative Brexit news and triggered a sell-off.

And while the Bank of England is now investigating, the alarming plummet can also be seen as a symptom of a jittery financial market.

Talk of algorithms and flash crashes may be largely meaningless to the average person but there is no doubt the falling pound is having major consequences for businesses and consumers.

Already we are seeing an increase in the cost of home heating oil while the RAC is predicting petrol and diesel will rise by around 3p a litre in the next couple of weeks.

Import costs will also be affected and this will eventually lead to higher prices at the tills, for food and other goods.

The pound is not just weak against the dollar, experts are warning that there could be parity with the euro by next year.

On the plus side, this is good news for traders in popular border shopping areas such as Newry, Strabane and Derry while exporters will also benefit as the weaker pound makes them more competitive.

But anyone heading off on holiday to the US or the eurozone can expect to face higher costs and as a result families may hold off on booking trips which would have implications for the travel industry.

Bear in mind we have two years of negotiations ahead before a full exit from the EU in 2019.

We still don't know what a post-Brexit UK will look like, what immigration controls will be in place or what trade arrangements will be determined.

We certainly don't know what the border between Northern Ireland and the Republic will look like. Will there be checkpoints such as the one set up by gardai last Monday in a day-long operation near Dundalk?

What the financial markets and the wider public need is certainty and stability.

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