Lending to Britons hit an 11-year high in the month of October, as consumer spending continues to outperform post-Brexit expectations. Furthermore, mortgage approvals hit 67,518 last month, up 2,500 from expectations.
Consumer confident continues to defy economic predictions post-Brexit and the Pound has surged 0.5 cent against the Euro and US Dollar.
But further challenges await the UK.
The UK economy could face significant downturn as a result of a weaker Pound, a message echoed by Bank of England’s Mark Carney. The UK faces rising consumer prices as a net importer which could dent consumer spending in 2017, unless the Pound stages a further recovery against the Euro and US Dollar. Whilst the UK has opted to leave the EU it will remain a member for at least the duration and completion of Article 50.
If the Supreme Court rule that Government are able to invoke Article 50 without Parliamentary consent the UK may begin its withdrawal from the EU early next year, which may lead to further weakness for Pound Sterling. The Government have made it clear they wish to curb immigration and that would require the UK to leave the EU.
As a result, sentiment around GBP may weaken and uncertainty will heighten if the Government wins the right to invoke Article 50 next week.
However if she loses the appeal, the Pound could find further support as markets relax over concerns for a hard Brexit. With Parliament then able to prevent the invocation of Article 50 if the Government pursuit a complete removal from the single market.
The Pound’s fate could depend on the outcome of the Court hearing
Next week’s Court hearing may have significant implications for Sterling exchange rates, and in the event Theresa May and her Government win the right to invoke Article 50 without parliamentary consent, the UK could be heading out of the single market entirely.
This could spell further concerns for the UK economy, defaulting to WTO trade tariffs will only lead to higher consumer prices and lower growth. The watchdog for Global trade’s Roberto Azevedo has stated that trade tariffs could cost consumers £9bn a year.
But Theresa May faces further legal challenges, as lawyers now suggest that the UK will not automatically leave the single market upon completion of Article 50. The UK could retain access to the single market through the EEA (European Economic Area).
They argue that the UK does not automatically withdraw from the EEA under Article 50, and Theresa May must also invoke Article 127 if Government wishes to leave the single market entirely.
Even if May wins the right to invoke Article 50 at next week’s Court appeal, Parliament could still veto a complete removal from the single market if the Court deems it necessary.
Current exchange rates
The below table provides current exchange rates which are accurate at the time of writing.
|Currency Pair||Current Interbank Exchange Rates|
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