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Sterling Exchange Rates Slide as Brexit Fast Approaches (James Lovick)

Thursday, January 5, 2017 2:13
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The pound as of this morning is firmly back under pressure against most of the major currencies with Brexit now fast approaching having started 2017. GBP EUR has slipped to below 1.17 this morning and this is most likely as a result of the new appointment of Sir Tim Barrow as the UK’s new Ambassador to the EU. The drop in sterling in my view is likely to be attributable to the perception that this change of Ambassador could help Theresa May push for the “hard” Brexit option which the markets generally perceive as high risk for sterling and hence the weakness in the pound.

Politics will be a central theme for sterling exchange rates as we approach 31st March, the date by which UK Prime Minister Theresa May will formally give notice that Britain is leaving the EU. Developments over Brexit are changing virtually by the day and this is having a real impact on the price of sterling. For up to date information and guidance with regards timing a currency exchange then feel free to make contact and we can try and assist.

Although European politics will have a major part to play for Euro exchange rates, the first major election in the Netherlands won’t be held until March. My view is that these European elections could be very damaging for the Euro although for the next three months it is Brexit which is likely to be the major driving force and which steals the headlines.

As such those clients needing to buy Euros are more likely to be hindered by the nervousness and uncertainty over Brexit over these next few months. Those clients holding pounds needing to buy Euros or US dollars for example are unlikely to see major improvements but there will be some opportunities in these markets. For those clients that need to buy sterling and are selling Euros then there could be some sizeable gains to be taken advantage of as we approach 31st March,.

On a more upbeat note the pound has received some small positive releases from the manufacturing and construction sectors following very strong Purchasing Managers Index surveys for these sectors. The numbers arrived better than expected in both cases which highlights optimism for the British economy.

However UK household borrowing has now risen to the highest levels since the financial crisis of 2008. This is a worrying development especially at a time when interest rate policy by central banks is at a turning point. News like this is not going to help drive the pound higher when debt levels are at such high levels.

If you would like further information on any of the major currencies to include GBP, EUR USD, AUD and NZD and to discuss how we can assist then please feel free to contact me on 0044 1494 787 478 and ask one of the team for James. Alternatively, I can be emailed directly on


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