Brexit plans rattle the Pound

Pound Sterling has had a particularly poor start to 2017, with the currency losing value on almost a daily basis as we enter a crucial time for the UK.

Currency markets were already weary of the Pound as we entered 2017, as we await the outcome of the Supreme Court’s ruling on whether or not the UK Government require Parliamentary approval before invoking Article 50, and officially beginning the Brexit process.

I think it’s fair to say that we can expect to see volatility within GBP exchange rates when the Supreme Court’s decision is announced, with the likelihood being Sterling strength if the Government is unsuccessful in their appeal against Novembers High Court ruling, and Sterling weakness if the Government is successful.

My thinking behind this view is that if the Government is successful and therefore allowed to begin the Brexit process without Parliaments permission, the Brexit will likely begin as soon as March and I think we could see Sterling drop in this instance.

Our readers with a Sterling based currency requirement should note that the outcome has generally been expected to be released between the 12th of January and today, so do get in touch if you wish to be kept updated.

Why did the Pounds sell-off suddenly pick up speed?

The currency markets were rocked last Monday after a much talked about interview with UK Prime Minister, Theresa May gave us an insight into the Governments Brexit plans.

May gave what many have considered to be a ‘Hard Brexit’ leaning interview, whereby her priorities appeared to be controlling immigration levels as opposed to retaining access to the UK’s single market.

Although May denied a ‘Hard Brexit’ bias in the aftermath of that interview, the damage has been done and the Pound has lost almost 2% since then, making a €200,000 property purchase over £3000 more expensive.

When could Sterling exchange rates suddenly move again?

At the time of writing we’re awaiting the Supreme Court’s decision and until last Friday I would have said that ruling was the main topic of discussion right now. Then late on Friday it was announced that Theresa May will be giving a Brexit related speech later today, which sent the market lower.

Brexit jitters over the weekend resulted in Sterling weakness across the board, as investors anticipate May to outline a Hard Brexit plan with heavy emphasis on the border control and an attitude of openness towards the setting up of business deals with countries that operate outside of the EU.
With this in mind I’m expecting these two factors to be the biggest drivers of Sterling value at present, but it’s worth noting that Inflation data for the UK is released at 9.30 this morning, and it’s expected to show a slight gain for both the month and year, and then on Wednesday the UK’s official Unemployment data figures will be released at 9:30am also.

On a final note, I think it’s worth noting for any clients planning on buying or selling the Pound that over the weekend US president elect, Donald Trump declared that a trade deal between the UK and US can be set-up quickly into his Presidency. Whilst comments such as these, from what will be the world’s most powerful person from Friday, would usually boost the Pounds value, markets were unfazed as the Brexit jitters surrounding May’s speech today continued to weigh on the Pound.

Brexit Update

During her speech later this morning (11.45am) May is expected to announce that the UK will not retain ‘partial’ EU membership. Her speech is expected to include further hints that Britain could leave the EU single market. The speech is also likely to include outlines on Brexit timings, customs unions (tariff agreements), immigration, potential transitional deals as previously alluded to by Brexit secretary David Davies and Chancellor Philip Hammond, and EU funding arrangements.

UK PM, Theresa May requires all legal administrations to be in place before invoking Article 50. Late last night a snap election was called in Stormont, Northern Ireland after the region was plunged into crisis after Martin McGuinness, the deputy first minister resigned earlier this month. The UK government has insisted that neither the pending Supreme Court decision or the political upheaval in Northern Ireland will delay it’s Brexit time table, but it will be interesting to see if this issue arises once again later down the line.

Todays Brexit speech from the PM could rattle Pound Sterling exchange rates, clients with a foreign currency requirement may be prudent in getting in touch with their dedicated broker. Our trading floor number is 01494 725 353, alternatively, you can get in contact with myself - Joe Wright at jxw@currencies.co.uk.

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