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Will the pound rise or fall when Article 50 is triggered?
Subject to some last minute surprise any day now Article 50 will be triggered which will officially launch the beginning of the UK’s official process to leave the European Union. The previous consensus seemed to be that this would be negative for the pound but in recent weeks we have seen a growing belief that we might actually see the pound strengthen.
There is no precedent for Article 50 being triggered so it is impossible to accurately predict what will happen making preparation all the more important. As the picture is changing continuously which means the likelihood of some big swings is very high. Where the market is expecting one particular outcome we generally see limited movement when however there are numerous outcomes the scope for volatility increases. If you have a transfer buying or selling the pound the next few days and weeks will I believe clearly be crucial to the future direction for the pound.
The triggering of Article 50 marks the end of the period of uncertainty where there remained a chance Brexit would not happen and we were unclear of what it meant. Whilst we still don’t know what Brexit will mean, once Article 50 is triggered Brexit will be happening and we will enter a new phase. A new phase of opportunity? Perhaps but for the UK and financial markets also a period of uncertainty. We will then be presented with a whole host of new questions such as ‘what kind of deal will the UK get?’ and ‘will the EU only discuss a deal once a Brexit bill is agreed?’.
Answers to these questions will not be forthcoming and we will, therefore, I believe enter a new round of uncertainty ultimately leading to sterling coming under pressure. Once we have signs of deals being struck and good news sterling should rise. This could take many months to manifest however so I would suggest any clients with any sterling requirement prepare themselves for a turbulent time as we approach this historical development.
We are specialist foreign exchange brokers who are here to help with the planning and execution of any currency transactions you will need to prepare in the future. We offer a commercial rate of exchange which I am confident will save you money over other options available in the market. If you wish to be kept up to date with the market developments please speak to me Jonathan by emailing myself on jmw@currencies.co.uk.
Source: http://www.poundsterlingforecast.com/2017/03/09/will-the-pound-rise-or-fall-when-article-50-is-triggered/
