Over the past weekend the UK’s Prime Minister, Theresa May made us aware that she plans to invoke Article 50 and begin the Brexit process at the end of March next year, and since this announcement the Pound has been under increasing pressure.
The news didn’t come as a complete shock to the marketplace as Boris Johnson did suggest that this would be around the time of the Article 50 invocation recently. When he made these comments the Pound weakened but not to the extent we’re seeing right now. The GBP/EUR exchange rate has dropped to a new year low, which is also over a 3 year low as we’re back to the levels of 2013.
This weekend’s news has outweighed the positive Manufacturing figure released for the UK yesterday. Business sentiment within the business sector is highly positive at the moment but despite the better than expected figures from yesterday’s Manufacturing survey, it did little to lessen the impact from Theresa May’s words over the weekend.
Later this morning there will be construction figures out of the UK, and then tomorrow there will be services figures releases, both at 9.30am and if they also beat expectations perhaps we’ll see the sell-off in the Pounds value slow down.
Moving forward I expect sentiment to continue to drive exchange rates involving the Pound as we’re seeing right now. Some major banks such as Danske Bank and Credit Suisse have both outlined price targets of below 1.10 for the GBP/EUR pair in the upcoming months.