This morning the British public by a small majority, have decided that Britain will no longer be a member of the EU, a vote that has shocked the market, bookmakers and the Pound.
Pound likely to weaken in the short term
The Pound fell sharply 11% on the news of a Brexit but recovered some of its losses in the early hours of the trading day. Pound will remain vulnerable to economic factors and any renegotiation with the EU. It’s likely that the UK will not get a better deal from the EU which will likely impact Sterling strength.
A great opportunity for those buying Pounds
Those looking to buy pounds are likely to have an extended period of opportunity until it’s understood the wider implications of a Brexit. In the mean-time, existing agreements with the EU will remain frozen until article 50 is triggered. With the announcement of David Cameron’s resignation, this may not be for some time.
There are also concerns regarding the economy, BoE’s Mark Carney warned about the potential implications of a Brexit, a long with the majority economists and Business leaders. If the UK’s economy was to tumble, so would the Pound.
Will the Pound recover?
The recovery of the Pound depends entirely on how the new government lead the UK through article 50 – the formal withdrawal from the EU. It also depends on the economy and the offer the EU provide, which could be much worse. A long term forecast for Pound is unknown at this stage, therefore anyone looking to buy or sell Pound Sterling may wish to do so whilst rates are still attractive. GBPEUR rates is 1.25 and GBPUSD is creeping back up to 1.40.