Sterling drops sharply on May’s Brexit comments.
In the last 48 hours the Pound has lost nearly 3 cents against the Euro and significant amounts against all other trading pairs. The Turkish Lira is the exception, which has made some gains, due to Turkey’s unstable political and economic picture.
This sudden drop in the Pound can be attributed to the current UK Prime Minister Theresa May’s comments on the UK’s stance on Brexit. She indicated that it was likely to be a “Hard Brexit”, whilst not saying directly we would be leaving the single market, she certainly hinted that it wouldn’t be a gentle exit. This has shaken market confidence in the Pound resulting in the drop to below 1.15 (market level) against the Euro.
With the Supreme Court expected to give their final decision which could possibly overturn the High Court’s decision on whether MP’s should have a say on Brexit. This could potentially free up Theresa May to keep her cards closer when negotiating the UK’s exit from the European Union. Likely to be the so called “Hard Exit” highlighted by the general media, this would impact further on the currency markets causing further drops for the pound and taking us below 1.12 GBPEURO.
In real terms this means continued weakness for the pound, lasting well into March. Theresa May has highlighted the 31st of March as the date Article 50 will be invoked, on this day I expect further volatility for the Pound against most major currencies.
Though it’s not all doom and gloom for euro buyers this year. The Euro zone will be facing fresh elections from France and Germany to name a few and with far right influence appearing to be growing across the European Union any shock results are likely to have a negative effect on the Euro. This will likely lead to spikes in buying rates for those holding Pound sterling and should be acted upon.
Across the pond, Donald Trump is to be officially sworn in as the 45th US President of the United States of America on the 20th of January. The markets have had a mixed reaction to the recent election and Mr Trump’s controversial policies. I expect further volatility with big swings either way against the pound as these polices come to fruition, or don’t….
In the short term, if you’re planning on an early getaway this month, Thursday will be the next big day for the markets, with a possible Supreme Court decision expected, coupled with the ECB Monetary Policy meeting at midday. I expect big swings this day and I’m leaning towards negativity for the Pound so it may be prudent to buy your holiday money before this if you’re travelling at the weekend.
For any further information raised in this blog or help on any other currency matters please feel free to email me at email@example.com.
Order Travel Money HELP!
Cash Spend over £500 to qualify for the improved rate