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You are here: Home / British Sterling / Are you ready for a Brexit?

Are you ready for a Brexit?

June 7, 2016 by Rob Lloyd

Are you ready for a Brexit?

Surprisingly, polls now suggest that a Brexit could well be on the horizon, just 2 weeks before voting commences. What’s interesting is that the polls up to now have supported the stay camp, the government have tried endless tactics to keep us in and now it looks as though further intervention will have little, if not negative implications.

What will happen if we leave the EU

eu flag signThe only thing we know for certain is that article 50 of the Lisbon treaty will be invoked, this would allow the UK a minimum of 2 years to renegotiate terms with the EU, or find alternative trade partners. This means that for a minimum of 2 years, all existing arrangements with the EU remain intact.

This is about the only aspect of a Brexit that we know for certain as everything else is purely speculative, so what’s likely to happen during this period of uncertainty?

The impact of a Brexit on Sterling

Over the weekend polls swung in support of a Brexit vote, which lead Sterling to weaken 3 cents against the Euro. There will most likely be further Sterling weakness running up to the referendum with GBPEUR rates falling potentially to the low 1.20’s.

In the event of a Brexit, the Euro could also weaken which leads me to believe that the currency pair will not fall below 1.12. That being said, this would be a major drop on recent rates and those looking to transfer currency will be noticeably worse off. On the contrary, businesses that export goods to the rest of the world may find themselves busier during these periods of uncertainty, a cheaper currency makes foreign investments more attractive.

With all this in mind, the likely outcome is that Sterling will weaken for the foreseeable, and will likely take some time to recover. If you have a currency requirement and are concerned about how the EU referendum may impact your rates, it may be a good idea to transfer sooner rather than later as rates are still attractive at 1.28.

Filed Under: British Sterling Tagged With: Brexit, EU Referendum, Pound Sterling weakness

The information on this website is provided for information purposes only. It does not constitute advice to any person on any matter. Every reasonable effort is made to ensure that the information is accurate and complete but we assume no responsibility for and offer no warranty with regard to the same.

About Rob Lloyd

Robert brings with him a wealth of knowledge on what is impacting exchange rates, especially around the subject of the EU Referendum and the implications for Sterling and Euro exchange rates.

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