Yesterday we were informed that Article 50 will be triggered on Wednesday 29th March – a huge moment in history for the U.K to say the least. The triggering of Article 50 means the process of leaving the EU is officially in motion and unless all 27 EU states agree to extend it then we have a two year deadline to negotiate a deal.
For those with any currency requirements, buying or selling this is also extremely important news and the markets are poised for a sharp move in the next week or so.
We are likely to receive more information on exactly what route we are going take with these negotiations, and we will also see just what the market will do as soon as there is no turning back.
The issue is, you cannot look back historically and see what happened last time we had an event such as this as it has never happened before. In my view we may see one of three reactions, which really goes to show, if you have a requirement coming up even in the next few months you need to let us know about it and be prepared to move.
1) We may see the Pound fall sharply – Sterling exchange rates saw a huge drop when the original referendum vote results were released and now that things are officially moving forward, we may see the same reaction too. The Pound may also drop if the Government goes down the route of a harder Brexit.
2) The Pound may rise – There is the argument that the Pound may have a really solid gain after article 50 is triggered, due to finally having some certainty on what is happening. After months of arguments, challenges and potential hiccups at least the markets now know what the general plan is. Certainty is very important for a currency so you cannot rule out the chance of a Sterling spike.
3) Exchange rates remain in this range with not a lot of movement – We cannot rule this out as the market may have already priced in the triggering of Article 50 and the route the Government will go down. This is possibly the most unlikely of the three however there is always the chance that we will be at the end of next week without any large market movements.
In my opinion I would be surprised not to see a big move in the next week or so, this is a huge moment in history and the markets will have to readjust depending on plans for a hard or soft Brexit, and there will no doubt be a huge number of people poised to move money around the World as and when this actually moves ahead, leading to a great deal of market volatility.
If you have a large currency exchange to make involving buying or selling the Euro then feel free to contact me, Daniel Wright by emailing [email protected] and I will be more than happy to get in touch with you personally.