Britain could inherit as many as 50 existing EU trade deals with the rest of the world

Trade negotiations will be vital to the value of the pound following the triggering of Article 50. Theresa May has been very positive in regards to how trade negotiations will proceed. She spoke yesterday and claimed the UK will be able to use the blue print of up to fifty current trade agreements already in place. Essentially copying deals that are already in existence to avoid the long drawn out negotiations process. This could cause the first clash with Brussels.

Theresa May has caused some commotion by now claiming the exit process could take more than two years. This is not surprising to myself as I recall Sir Ivan Rogers, head EU ambassador resigned from his position stating the two year target was unrealistic. He said, “negotiations could take up to ten years”.

Will the Pound go up?

Despite this, I am of the opinion Sterling will rally against the majority of major currencies as trade negotiations progress. I do not think it will be quick, significant gains, I believe it will be more of a slow steady rally. If you have to trade to complete in the short-term please do let your currency broker here know your timescale, the currency pair and the size of your trade and we will endeavour to maximise your return.

It will be possible to simply cut and paste deals with countries such as South Korea, Mexico and Jordan.
- Theresa May, UK Prime Minster

Manufacturing data could provide Sterling strength

Tomorrow will see the release of UK manufacturing data. I think we could well see a significant increase. It would make sense considering the weak value of the pound. Demand on exports has been up and new trade balance figures will show current levels after the manufacturing data. I think Sterling has the potential to gain strength following these events.

It is also worth keeping an eye on the UK GDP estimate later in the day. It is an estimate of growth over the last three months. This can influence future monetary policy and can cause movement on the market.

Be sure to stay in touch with your broker regularly as any positive or negative news surrounding the Brexit has the potential for significant market movements. Please also get in touch if you are yet to trade with us and have a requirement in the near term on 01494 725 353 or by emailing me here.

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