Sterling sprung another surprise today after falling in value against all major currency pairs.
Many may have expected to see the Pound post another positive day after Monday’s gains, as late on Monday night it was announced that the parliamentary ping pong would come to an end as the Brexit bill was passed through parliament. Despite this positive sign that the UK government can now begin the Brexit when they want to, the Pound actually softened which may have spooked many hoping of a stronger Pound.
When compared with the US Dollar, the Pound is trading at an 8-week low and the Pound to Euro rate isn’t far from a 2-month low as the pair are now trading below 1.14 at the mid-market level.
I personally think the weakness can be put down to the prominence of the Scottish National Party in the media at the moment, highlighting their plans to hold another Scottish referendum on independence as every opportunity. This appears to be muddying the waters regarding the UK plans moving forward, and I think until the issue is out to bed it could weigh on Sterling’s value.
I’m expecting to see the pound rise in the wake of the triggering of Article 50, as I believe that more certainty is what Pound buyers are currently after. In my opinion the fall in the Pounds value over the past year reflects investors concerns, and that the Brexit has already been priced into the Pound’s value.
There are also a number of key European elections which could weaken the Euro creating demand for the Pound, and if the Fed Reserve Bank in the US doesn’t hike rates as many are expecting I think the Pound could also recover some lost ground against the greenback.
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