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.
The pound is in trouble. Real trouble. We shouldn’t be surprised to see the frailty of sterling and the continued pressure that it’s under will not give too much comfort for those of you that have been waiting for a change in fortune.
Article 50 is being triggered in the next 3 weeks and sterling has dropped like a stone from the near €1.20 levels of early February. In one of the most horrible weeks the pound has experienced this year, we’ll close the session close to €1.1350 and worse is yet to come it appears.
Looking ahead, next week we have the Dutch General Election which might provide some respite to the largely Brexit driven market. Rumours of Theresa May taking steps to begin the divorce from Europe as early as next Wednesday are now being spoken and the market is clearly nervous about the threat becoming an inevitable occurrence.
My view of this volatile market is that when the steps are taken, then we are in line to see a big, big slump in sterling. For many banks and investment houses, GBPEUR at parity or lower has long been touted and I’m increasingly wary that this is a real possibility. Waiting on this market if you have a need to fulfil a requirement is perhaps too big a risk.
Stay positive, expect the worse and hope for the best. Please get in touch if you’d like to discuss your need further. Much like the adders that are emerging from hibernation around our Cornish office block, this market has the capabilities of a nasty bite.
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.