The future of the UK remains uncertain which could weigh heavily on the Pound in the coming days and weeks.

Article 50 is finally triggered

The market had braced itself for yesterday’s historic event, with the UK government finally triggering Article 50 of the Lisbon treaty. This officially started our Brexit process and we have now officially passed the point of no return.

The UK is the first country to leave the EU and the government’s job is to now negotiate the terms of our departure over the next two years.
Many clients holding Sterling had been waiting for this juncture before committing to a currency exchange and the Pound actually found some support in the build-up to yesterday’s key political decision.

It was a fairly volatile morning for the Pound having seen recent gains eliminated early on, before a recovery and an improvement against the EUR, USD & AUD by lunchtime.

The Pound’s position was solidified during Prime Minister’s question time, with Theresa May reassuring the public that they would be working day and night to secure the best deal possible for the UK and hoped to keep “close ties” with our European neighbours, in terms of trade and security.

Whilst only time will tell whether this is the case or not, her bullish tone coupled with the Brexit bill finally being triggered, seems to have brought some confidence back to the market and this could help stabilise and even boost the Pound’s value further over the coming days.

When should you sell any Sterling positions?

Personally, I am still wary about gambling on massive improvements for the Sterling over the coming weeks and months. Despite the recent upturn and yesterday’s positive movement, there are still many unanswered questions.

For example what deal will be in place for the UK as we negotiate our exit, what potential fines need to be paid and what vision does the government have for the long-term future of the UK economy?

Whilst Theresa May made it clear that the sanctuary of UK citizens in Europe and EU nationals here in the UK was of the up most priority, we still have no confirmation of what fine the UK will be paying to exit and as such the Pound is still liable to some negative movement in my opinion.

The question clients holding Sterling need to ask themselves is are they prepared to risk losing the gains they’ve made over recent days and is the long-term economic prosperity of the UK economy yet secured? Whilst these type of questions remain unanswered I am still of the opinion that clients should be looking to take advantage of short-term market spikes, rather than hold out for long-term sustainable gains.

Key economic data

Whilst talk of Brexit has been driving market sentiment for some time, we also need to consider that the Pound’s recent upturn has been supported by better than expected economic data.
Last week’s Retail Sales figures were a prime example of this and with UK Gross Domestic Product (GDP) figures released on Friday, could we see further improvements for Sterling?
Any figure above the 0.7% growth expected will more than likely push Sterling’s value up, so any clients with a GBP requirement should be keeping a very close eye on market developments over the coming days.

Pound to Euro exchange rates will remain volatile until its known what form negotiations will take. Those with a Pound or Euro requirement may be prudent to get in touch with our brokers today so we can keep you informed of any hurdles that may arise. Call us on 01494 725 353 or email me at mtv@currencies.co.uk.

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