The Pound has seen its fair share of ups and downs over the last few weeks and most of it not connected to hard data releases.
With the new President Donald. J. Trump taking the reigns in January and hinting on better trade relations with the UK rather than Obama’s “back of line” rhetoric that currently stands. This gave the Pound a boost against most currencies bringing GBPEURO rates to nearly 1.17 market level.
However these gains were temporarily removed when a leaked memo came out highlighting the current lack of an exit plan for the EU and the necessity to hire another 30,000 civil servants to deal with Article 50 and Brexit. This has since been rejected by the government as hearsay and in no way accurate to there current plans…
Even if this was the case and this was just another attempt to derail the Brexit process it shows how fragile the Pound is that a single memo can wipe several cents against the Euro. The Pound has since recovered some of this ground but expect further falls as we head towards March and the triggering of Article 50.
On the other hand its not all doom and gloom for the Pound with better than expected growth and slowing inflation, leaving the EU has so far not be at least in the short term a disaster for the economy.
Coupled with possible EU exit referendums and elections in France, Italy and Germany to name a few the Euro is struggling against the tide of division and Euro buyers are likely to see some good opportunities over the next few months as this political instability plays out across the continent.
In other currency news India has withdrawn its 500 and 1000 Rupee notes in an effort to control the amount of unaccountable “black” money circulating the country as well as the high number of forged notes that have been plaguing India’s economy for years. This has caused significant upheaval in the country and abroad as foreign tourists are now stuck with the notes as airports last Friday closed there tills to the old notes. Indian nationals have until the 30th of December to trade there current notes for new introduced 2000 rupee notes as long as they can provide source of funds to do so. There has been a freeze on ATM withdrawals and with 47% of daily transactions in India involving 500 and 1000 rupee notes this is likely to have a negative short term effect on the rupees value against all major currencies.
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