It is somewhat ironic that the man who made a $1.5 billion profit on Black Wednesday in 1992 when he bet against the pound sterling ahead of the UK exit from the ERM would be the same one to suffer major losses on the same currency 24 years later. According to Bloomberg, Soros was long the pound before Britain’s vote to leave the European Union on Friday, and didn’t “speculate against sterling while he was arguing for Britain to remain,” a spokesman said in an e-mailed statement Monday. In other words, Soros did put his money where his Op-Ed was.
As a reminder, before the Brexit vote, Soros warned in a Guardian Op-Ed that the pound could slump more than 20% against the dollar as voters were grossly underestimating the true cost of Brexit. Sterling plunged 8.1 percent on Friday to its lowest level in more than three decades, and tumbled again on Monday.
It is more interesting, however, what Soros' trade is following his Op-Ed sequel in which he said that the "catastrophic scenario that many feared has materialized, making the disintegration of the EU practically irreversible" adding that "The consequences for the real economy will be comparable only to the financial crisis of 2007-2008." If he is again trading as per his conviction, we would expect Soros to now be negative the EUR much more so than the GBP, which is now merely sliding lower in attempts to spook and punish the UK public into changing its mind into voting Remain in a potential second referendum as a result of the ongoing financial turbulence.
“Britain eventually may or may not be relatively better off than other countries by leaving the EU, but its economy and people stand to suffer significantly in the short to medium term,” Soros wrote in his June 25 essay. Financial markets “are likely to remain in turmoil as the long, complicated process of political and economic divorce from the EU is negotiated,” he said.
However, despite the historic crash in the pound, which tumbled over 8% on Friday and has slid nearly another 4% this morning, almost triple the loss the currency suffered on Black Wednesday, it appears that Soros was well hedged: “Because of his generally bearish outlook on world markets,” Soros did profit from other investments, according to the statement. As a reminder, on June 9 the WSJ reported that Soros Returns To Trading With "Big, Bearish" Bets On Economic Turmoil.
Those bets have so far paid off.