Sterling Spike Softens – Where Next for the Pound? (Matthew Vassallo)

As the dust starts to settle following a busy few weeks for the UK economy, many clients holding Sterling positions have been questioning what strategy to undertake moving forward.

The markets have had to digest not only the triggering of Article 50 and the realisation that Brexit is actually happening but also UK Prime Minister Theresa May’s shock announcement, that the government have called a snap general election in June.

Investors have had to react to both of these seismic economic decisions and as such the Pound has remained volatile against the majority of its major currency counterparts. If you are holding Sterling now could be the time to consider your requirements, in terms of what exchange rate you may targeting and what is your bottom line?

Even more importantly I would be asking whether or not you are risk adverse enough to gamble on a downside loss, which in my opinion still outweighs the potential upside gains.

If the current market has taught us anything it’s that any outcome is possible, we only have to look at the results of last year’s Brexit referendum and President Trumps victory as proof that the seemingly impossible outcome can still occur.

For this reason, I have been urging my clients to take stock of the recent market developments and react to them accordingly. This means that any clients holding the Pound, should in my opinion, be looking for short-term market opportunities rather than gamble on longer-term sustainable gains. Of course, there is no way to quantify exactly how the market will move and what future economic and political decisions will be made. You then also have to question what affect these will have on the Pound’s value but this in itself backs up my opinion.

Why gamble on such an uncertain and unpredictable market? We are in a state of limbo here in the UK, as we wait for the government to start Brexit negotiations. What if we cannot secure a favourable deal with the EU? What if we cannot negotiate custom agreement to allow free movement of trade with our closest allies? Whilst these questions remain unanswered, I feel there is too much risk in the market to just assume that the recent upward curve will continue unscathed.

If you have an upcoming Sterling currency transfer and would like to be kept up to date with all the latest market movements, or simply wish to compare our award-winning exchange rates with your current provider, then please feel free to contact me on 0044 1494 787 478 and ask one of the team for Matt.

Alternatively, I can be emailed directly on [email protected].