A Brexit supporter holds a Union Flag at a Vote Leave rally in London
Warning that the pound would plunge "precipitously" if Britain votes to quit the EU, investor George Soros on Tuesday predicted that the possible impact this time would be "bigger" and "more disruptive" than the 15 per cent devaluation that occurred in 1992.
Writing in the Guardian ahead of Thursday's referendum, Soros, who made a fortune betting against the pound when Britain crashed out of the European Exchange Rate Mechanism in September 1992, said the drop will be more dramatic this time if the UK leaves the 28-member European Union (EU).
On June 23, voters of the United Kingdom will voice their opinion whether the nation should 'Remain' in or 'Leave' the European Union.
Soros said in his article that leaving the EU would see sterling fall by at least 15 per cent, and possibly more than 20 per cent, to below $1.15 from its current level of around $1.46.
"The value of the pound would decline precipitously. It would also have an immediate and dramatic impact on financial markets, investment, prices and jobs. I would expect this devaluation to be bigger and also more disruptive than the 15 per cent devaluation that occurred in September 1992, when I was fortunate enough to make a substantial profit for my hedge fund investors. British voters are now grossly underestimating the true costs of Brexit. Too many believe that a vote to leave the EU will have no effect on their personal financial position. This is wishful thinking."
Soros warned that the Bank of England's ability to respond to a recession or fall in house prices was limited, with many monetary tools already having been used to steer the UK out of the global financial meltdown.
Sixty years of investing experience had taught him that the only winners would be financial speculators, the 85-year- old Hungarian-American investor said.
Soros writes: "Today, there are speculative forces in the markets much bigger and more powerful. And they will be eager to exploit any miscalculations by the British government or British voters."
"Brexit would make some people very rich - but most voters considerably poorer," Soros said.
In 1992, Soros used his Quantum Fund investment vehicle 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.
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