Throughout the last two trading days the pound has spiked against most of the major currencies and I put this down to UK manufacturing exports hitting a 2 year high! This is no surprise as businesses from outside of the UK are taking advantage of the cheap pound. I do believe this is a temporary spike and any client buying a foreign currency should think about taking advantage.
In recent weeks’ uncertainty has been rising in regards to when the UK Prime Minister Theresa May will trigger Article 50. Before she was elected she implied the plan was to invoke Article 50 towards the end of 2016 or early 2017. However, she has back tracked from this statement and stated activating Article 50 of the Lisbon Treaty will take time and needs to be done sensibly. To me it feels that the UK are now sitting in limbo.
In fact, Bookmakers believe it’s more than likely that Article 50 will be invoked either 2018 or not at all. Furthermore, the next potential labour leader Owen Smith has made it clear he is going to do everything in his power to not leave the EU.
In the race to become the next leader of the Labour party Owen Smith has pledged the he will do everything in his power to block any attempt by Theresa May to invoke Article 50 until the Conservative leader holds a 2nd referendum to finalise the ‘Brexit’ deal. In addition, as Theresa May took over from David Cameron and was not voted in by the UK public, Owen Smith has stated if the Conservative party are not prepared to hold a 2nd referendum he believes a general election is the only way to settle the dispute.
For clients holding onto the pound, the problem they have is that until the Conservative party actually make some decisions the uncertainty is going to keep the pound under pressure. Also the UK cannot start formal negotiates with other nations until they know their own EU fate. Personally I believe we have seen the major falls from the Brexit however overtime the pound could lose further value.
I would strongly recommend any client buying a foreign currency with the pound this year or next to speak with your account manager as soon as possible to devise a strategy that works for you. Many clients do not actually realise they have more than one option.
With further movements likely in the days and weeks ahead, keeping in touch with a broker that knows the markets and what affects them can help you make an informed decision on a currency transfer. Call us today on 01494 725 353.
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