George Soros, the billionaire whose 1992 wager against the pound made hedge fund history, didn’t repeat the bet ahead of sterling’s record tumble on Friday.
Soros was “long” the currency 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. “Because of his generally bearish outlook on world markets,” Soros did profit from other investments, according to the statement.
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In the days before the vote that marked a rupture between the U.K. and the EU, Soros had warned that the pound could slump more than 20 percent 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.
“Now the catastrophic scenario that many feared has materialized, making the disintegration of the EU practically irreversible,” Soros wrote in a June 25 essay reflecting on the U.K. vote for Project Syndicate. “The consequences for the real economy will be comparable only to the financial crisis of 2007-2008.”
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Soros rose to fame as the money manager who broke the Bank of England in 1992, netting a profit of $1 billion with a wager that the U.K. would be forced to devalue the pound and pull it from the European Exchange Rate Mechanism. Soros said in an opinion piece last week in the U.K.’s Guardian newspaper that he was “fortunate” to make a substantial profit for his hedge-fund investors at the expense of the BOE and the British government.
Investors face months of uncertainty following Friday’s vote. The mechanics and terms of the U.K.’s exit are yet to be determined, and the nation’s political leadership during the negotiations is unclear after Prime Minister David Cameron announced his resignation.
“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.