The mood on both sides appears to be softening which could lead to Sterling strength in the coming weeks.

Article 50 to be triggered – What could this mean for Sterling exchange rates?

Tomorrow brings the next chapter in the Brexit series as Prime Minister Theresa May will officially trigger Article 50 and start the ball rolling on Brexit negotiations. From here forward talks between Britain and the European Union will begin and we can expect to see both sides trying to get the best out of the divorce. It does appear that the markets have already priced in a really tricky exit for the U.K and this is why Sterling exchange rates have dropped off significantly since the vote back in June.

My personal opinion on this is that the Pound is undervalued and the uncertainty being lifted may give the Pound a small lift in the coming weeks.

What we will see tomorrow is Prime Minister May deliver news that she has officially triggered Article 50 and with this we will expect to get an indication of just how hard the Government will be pushing the EU and what we will initially be aiming to achieve.

As we have seen many times before, investors and speculators alike will be looking for clues as to whether we will be going down the route of a harder or softer Brexit, harder may lead to Sterling weakness and a softer approach may give the Pound a boost.

I would not be surprised to see a fairly confident stance from May and the Government to start things off and that combined with the certainty that this now brings (for the time being) I feel the Pound should have a good end to the week.

Should I buy my currency now?

This is the question I have been asked the most lately and quite simply all I can answer with is how I would personally look to carry out an exchange if I had one coming up.

The key thing to remember with this Article 50 issue at present is that we cannot look back over history and see what happened last time we had this issue, as it has never happened before.

With that in mind and the way that the markets are so fragile at present then my view is that If I had currency to exchange in the coming days, weeks or even months I would consider locking in a portion of it at least, just to protect myself from risk.

In my personal opinion I feel that Sterling will strengthen but with so many different outcomes possible and so many variables involved, it is in my opinion not worth the risk of having your whole requirement left open to the elements.

By booking in a portion of what you need, you hedge the risk a little whilst leaving yourself a healthy sum of currency to exchange should the rate move up in your favour, whilst protecting yourself a little from a Sterling slide which just cannot be ruled out.

Other economic data this week

We must remember that on top of the Article 50 fun and games we also need to continue to concentrate on economic data too.

On Friday morning we have GDP (Gross Domestic Product) figures for the U.K and expectations are for the final revision of U.K economic growth in the final quarter of last year is that this may remain at 0.7%.

Any changes to expectations may lead to a volatile Friday morning for Sterling exchange rates so pop 09:30am in your diary as a time to keep an eye on the Pound, and if you would like us to make you aware of any sharp market movements then you can set a rate alert here. Alternatively, you can email me here or call 01494 725 353 to speak to one of our experts.


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