We are now 3 months on from the Brexit vote and the UK Government have little plans in place to reassure the public. Sterling suffered last week with Boris Johnson stating Article 50, the legal mechanism for leaving the EU, should be invoked early next year.
There has actually been lots of positive news with UK car production at a 14 year high and the ONS (Office for National Statistics) stating there has been no major impact on the UK economy since the vote. The predictions of economic doom and gloom have not yet materialised and whilst good in the short term, business confidence is beginning to take a hit from the vote. With SME’s making up 99% of UK business it is vitally important that they do not bare the brunt of any post-Brexit negotiations.
Has the pound bottomed out yet?
The Bank of England have hinted at further interest rate cuts in the near future and economic data will likely shape their decision as we approach the final quarter of the year. With business confidence likely to fade further there is every possibility that this will soak into the economy as we approach the new year. I think it is far too soon to call a bottom yet for the Pound and there could well be further losses to come.
Is now the best time to buy with the Pound?
With no clear direction for Sterling at present and much of Sterling’s value being driven by Brexit, it is likely that Sterling will be faced with further losses ahead. It is however, currently the best time in 3 years to buy Sterling if you are selling Euros, Australian Dollars, New Zealand Dollars and Canadian Dollars.
If Article 50 is dealt at the early stages of 2017, Sterling could lose further ground against its counterparts. Making the most of current levels could be worthwhile.