The pressure on the Pound is continuing this morning as yesterday afternoon we really saw the sell-off pick up steam.
The catalyst for these falls has been UK Prime Minister, Theresa May’s comments over the weekend at the Conservative Party Conference. She has outlined the end of March next year as the date that the invocation of Article 50 will take place, meaning the UK will then have 2 years to remove itself from the EU.
This news has been Sterling negative as many had hoped for a long drawn out process, with lots of negotiations and hopes that the UK will retain access to the EU’s single market but that doesn’t seem to be the case. What’s more likely to occur will be a ‘hard brexit’ which is what many hard-line brexit voters had hoped for, but the financial markets hadn’t.
For those hoping that the Pound will recover, there are a few forecasts from major financial institutions that I think they should be aware of. Danske Bank has previously highlighted 1.08 as level the GBP/EUR pair could fall to within the next 6 months. Credit Suisse this past weekend outlined 1.0922-1.10 as a price target and Unicredit have just adjusted their forecast to 1.1111 (0.90 in the EUR/GBP reciprocal rate) so they clearly expect further falls for the Pound.
Do bear in mind that Sterling exchange rates in many cases are trading at over 3 year lows and in GBP/USD’s case, a 31 year low.
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