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What is the impact of Article 50 on Sterling exchange rates (Tom Holian)
We are now less than 2 weeks away from the proposed deadline of triggering Article 50 by the UK government and although we have seen some small gains for the Pound against both the Euro and US Dollar at the end of this week I think this is a short lived increase.
If you cast your mind back to late June 2016 when the Brexit vote was officially announced the Pound went into free fall as panic set in that the UK would lose its rights to the single market.
With the negotiations still yet to start the Pound could be in for another hugely volatile period coming up. As the precedent was set last year this is one of the main reasons why I think we could see another period of huge volatility.
Sterling exchange rates have been under pressure for weeks but have not moved as much during this period as some might have expected. It’s almost as if the markets are waiting with baited breath as to what may happen when Article 50 is formally announced.
With the UK government still yet to confirm whether or not we can still maintain access to the single market there is clearly a large risk that negotiations will go badly between the UK and the European Union.
We have already seen disagreement between the House of Commons and the House of Lords this month as to whether rights will be granted to Europeans living in the UK and Britons living abroad.
Effectively, once Article 50 has been triggered there will be no going back and if negotiations stall then this is why I think the Pound could potentially really struggle against all major currencies.
Britain has still yet to confirm its financial commitments to the European Union and until the UK has agreed to settle then a post-Brexit trade deal is likely to stall.
The other member states of the European Union which total 27 are likely to make life difficult once the negotiations begin and this is another reason why I think the Pound will fall once Article 50 has occurred.
It is important to make sure you’re in a position to react very quickly before the markets move.
If you are in the process of buying a property in Europe in the next few weeks and would like to avoid the uncertainty of what happen to exchange rates then it may be worth buying a forward contract which allows you to fix an exchange rate for a future date for a small deposit.
If you would like further information or a free quote when buying or selling currency then contact me directly and I look forward to hearing from you.
As a specialist foreign exchange broker I am able to offer you bank beating exchange rates and also help you with a strategy for your currency transfer.
Email me directly with a breakdown of your requirement and I look forward to hearing from you.
Tom Holian [email protected]
Source: http://www.poundsterlingforecast.com/2017/03/18/what-is-the-impact-of-article-50-on-sterling-exchange-rates-tom-holian/
