Luke Trevail, a currency exchange specialist at forex brokers TorFX, looks at the factors driving the pound’s exchange rate in the week gone by.
Sterling ended a fairly successful February with a bumpy start to March and we have seen GBPEUR close around 1.5% lower on the week.
‘By the end of March’ is all that we know about Theresa May’s Article 50 Plan. Now we have turned the calendar page, we’re just a matter of days from the official start to the divorce proceedings beginning. We know the journey over the next 2 years will be full of market spikes and slumps, but to see the pound lose ground when the Prime Minister acts is expected and shouldn’t come as a surprise.
Depending on the newspaper that you read, some suspect that the triggering of the vital piece of legislation won’t affect the market. After all, it’s a known event, it’s happening and we know that already. Unlike the referendum result, or Trump’s winning of the US elections the market may have factored everything in. I am more cautious and I fear that it’s a naive assumption that the pound hasn’t got further to fall, Brexit isn’t a welcome introduction it seems and the uncertainty of the future will not prop up sterling.
Those of you waiting to repatriate Euros to GBP should be on alert as there’s seems like an opportunity to act immediately on Article 50 being acted. If you’re waiting to see how the market’s move and hopeful of an increase then your luck seems to be running out, for now.
European elections will dominate the market over the coming weeks, the Dutch go to the polls on 15th March and the anti-establishment voting pattern we’ve seen recently could plunge Holland into the prospect of leaving the European Union in the future too. French and German elections later in the Spring will of course be more critical in mapping out the future of the Union. The single currency will suffer you’d expect with this uncertainty, but for now it’s showing signs of resiliency that we mustn’t ignore.
This article is written by a foreign-currency broker working for TorFX, a forex broker established in 2004 to provide foreign exchange and international payments to both individuals and companies. TorFX is authorised by the Financial Conduct Authority under the Payment Service Regulations 2009 for the provision of payment services. Their FCA number is 517320. To verify their authorisation, you can visit the Financial Services Register and search the register using their FCA number. SPI is not responsible for the opinions of guest contributors.