Parliament clears way for talks with EU

Parliament has passed the Brexit bill, providing a clear route for the Government to trigger Article 50 so that the UK can prepare itself for existing the EU. Rebel MP’s yesterday admitted that they wouldn’t have the numbers to block the issues in the House of Commons and as a result the peers backed down on the issues of EU residency rights. The bill is expected to become law by Royal Assent sometime next week. This will surely pave the way for a 2nd Scottish referendum.

The second referendum is expected to take place between Autumn 2018 and Spring 2019. Nicola Sturgeon has stated that the Brexit is threatening Scotland’s economy, and she wasn’t just about to lie down. She is expected to seek legal authority for a referendum from under section 30 of the Scotland Act 1998.

With no major economic releases yesterday for the UK, many analysts believe that this announcement was behind Sterling’s rally yesterday. The reason behind this, A Scottish referendum before the UK is set to leave the EU could cause the Pound to weaken even further. This could cause Theresa May’s hard Brexit approach to therefore be softened slightly to accommodate the Scottish views. During the Brexit, Scotland voted 62/38 to remain as part of the EU. Long term readers and clients of ours will be aware of the implications that the Scottish referendum had on the value of the Pound.

Although this is someway off, it is worth taking into consideration especially for our readers thinking of moving abroad in the longer term.

What will happen to the Pound when Article 50 is triggered?

It has been a long anticipated event for Sterling clients, with 3 potential scenario’s I believe. These are;

  • No market movement – Some analysts believe that the effect of triggering Article 50 has already been priced in and once triggered, little effect will be felt on the market.
  • Sterling negative – The pound could see a sharp sell once article 50 is triggered, as there is no going back and a trade deal with the EU is in the balance, due to our hard stance on Brexit.
  • Sterling Positive – Investor confidence may return once article 50 has been triggered, as there is definite direction and the pound is no longer in limbo. Sterling has already jumped up against a basket of currencies since the beginning of the week, especially in regards to the Euro where it strengthened by 0.5% yesterday.

I personally think the Pound may strengthen on the back of triggering Article 50, however it is impossible to be certain especially during such a busy period both economically and politically.


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