Supreme Court decision central to Brexit and Pound Sterling's performance

Just lately Sterling’s buoyancy has come under pressure as fresh fears over the potency of Brexit resurfaces. Talk of demands for a £50bn ‘exit bill’ and fresh uncertainty over the cost to the UK economy will do little to reinforce confidence in the UK. The Pound’s positive position stems from a belief that a ‘softer’ version of Brexit will take place in the future. A hard Brexit involving the UK severing all ties with the EU is seen as damaging by financial markets.

With sentiment leaning towards a view the previous decision will be upheld, Sterling has remained supported but I feel much of the good news here is priced in. I would not rule out further Pound strength off the back of the High Court decision being upheld but the risk seems to the downside. Were the Supreme Court decision to reject the High Court decision Sterling would I believe drop sharply.

What actually is Brexit and how will this impact the Pound?

Much of the UK’s economic strength stems from London and its use as a platform for numerous banking, insurance, legal and financial services throughout Europe. The fear is without the ‘passporting rights’ that allows various businesses to operate in such a manner, the UK will lose its economic might.

Even if the decision is upheld the challenges ahead for the UK are numerous. Problems include the passage through parliament of a bill to allow for the triggering of Article 50. Then there remains the detail of the bill which will indicate Theresa May’s goals from Brexit. Trying to undo 40 years’ worth of political and legal ties in 2 years is sure to be fraught with problems and it seems sterling is going to be the main loser from this uncertainty. It seems sterling could struggle coming into the New Year as the harsh realities of Brexit become apparent once again and in my opinion any ‘good news’ will be short lived.

This morning we have the latest UK borrowing figures at 09.30 which are projected to show a big increase in UK government borrowing. Friday we have the latest estimate of UK GDP (Gross Domestic Product) growth figures. Politics will continue to dominate the Pound and with all the big pieces of global data out of the bag this month I think we are going to see more of the politics and uncertainty over Brexit come back into force. If you have a GBP requirement, buying or selling please speak to us today to be kept up to date.

With the real Brexit yet to happen in March, the Pound remains in good form this side of Christmas. If you have an upcoming currency transfer that needs attention speak with our currency experts today on 01494 725 353, they may be able to help you make an informed decision on an exchange. Alternatively, you can email me at jmw@currencies.co.uk.

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