The pound spiked to its highest levels against the euro since May 2017 during yesterday’s trading, following Theresa May’s statement in the House of Commons regarding a potential extension to article 50 and a set of votes to take place in Parliament in March.
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May has been facing heavy resistance from remainers within her party, with many of them threatening to resign in order to stop the UK leaving with no deal, so she will be hoping that her statement will ease some of the pressure.
The Pound’s gains were a result of the market’s reaction to a potential delay in article 50 and in her announcement yesterday, with May making three headline commitments on Brexit:
Yesterday’s events have resulted in a good opportunity for GBP sellers to take advantage of, but the question is how long will this last and when should clients buying foreign currency take the plunge? What we have seen in previous reactions from the pound is that the markets don’t like Brexit, especially if the path to it is a hard one or a no deal. In my opinion there is still the possibility for a no deal Brexit as May has failed to commit to taking this option off the table, which could result in losses for the pound.
If there is an extension to article 50, but a deal still cannot be agreed then there is going to be even more uncertainty for the pound.
If you need to buy foreign currency with pounds then taking advantage of any short-term spikes could be a sensible move as I believe the pound is extremely vulnerable to further Brexit developments.
The middle of March looks set to be an extremely volatile period and we could witness some of the most influential days in recent political history. But there is likely to be plenty more volatility in the run up to March 12th, with a number of amendments being voted on today which could alter the course of Brexit, giving MPs a chance to have their say on what should happen next, which could therefore have a significant impact on the pound’s value.
The amendments that have been tabled include those put forward by Cooper/Letwin, Percy/Hart, Alberto Costa, Labour and SNP. Interestingly Labour are expected to back a second referendum or a people’s vote on Theresa May’s deal, which has been seen as a huge U-turn by Jeremy Corbyn. Anyone with a sterling requirement should keep a close eye on today’s events as they unfold to limit their exposure to any potential moves in the pound’s value.
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