The pound rallied yesterday as the High Court ruled the UK Government must seek parliamentary approval to trigger Article 50, the legal mechanism to leave the EU. This potentially wide reaching case is to be appealed to the Supreme Court in December with a final decision in January. This makes Theresa May’s plan to invoke Article 50 by April unlikely. The pound will now be subject to a number of new political factors as parliament could be openly debating the Brexit plans and there is an increased possibility of a snap General Election.
Theresa May is apparently to tell Jean Claude Junker the European Commission President this will not derail her plans. This means sterling could remain in a very volatile place with unexpected swings as political stories break.
This does not mean the Referendum result is cancelled but by being subject to parliamentary approval the government’s ‘hard’ Brexit approach is much less likely. Sterling has found support on this latest development which alongside some positive comments from Mark Carney saw the pound touch a 4 week high against the Euro and a 6 week high against the US Dollar. The big question of course is what next for sterling?
My central forecasts for the pound remain that it could have lower to fall between now and the New Year but this twist does open up much welcomed opportunities for anyone holding the pound looking to buy a foreign currency. Sterling’s much improved position at present could prove short lived as we approach the US Election next week. Many of the forecasts suggest that the US dollar will strengthen following the result as it makes it more likely the Federal Reserve will raise their interest rate in December. It is clear that politics at home and abroad is going to remain the focus on sterling exchange rates so if you have a transfer to make in the coming months please ensure you have highlighted any intentions so that we might keep you up to date with the latest news.
The news yesterday gave Sterling fresh hope but it remains that the UK will go ahead with some form of Brexit. Feel free to email me at email@example.com if youd like to discuss this latest development and how it could impact your requirements.
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