Exchange Rate Forecast

Exchange rate forecasts and foreign currency news

You are here: Home / British Sterling / What we’ve learnt from Brexit so far

What we’ve learnt from Brexit so far

by

What we’ve learnt from Brexit so far
  • Sterling likely to weaken again
  • Brexit unlikely to happen until at least 2019
  • UK must choose between soft or hard Brexit

the impact of brexitBrexit as far, has seen many twists and turns since the announcement a month ago, and whilst the dust settles on Westminster, the rest of the World watches with anticipation as the UK prepares its “exit” from the European Union.

With immigration being the hot topic surrounding Brexit, Europe has seen in recent days’ evidence of why many disagree with the concept of free movement of people. The attacks in France and Germany are some of the major events of the last 7 days, only today more attacks happened in the quiet area of Northern Normandy, resulting in a priest losing his life during a ceremony.

Coming back to the UK, the first economic releases since the historic vote have begun dripping through, and what we have seen so far points towards economic contraction. What does this mean for Pound Sterling?

Pound likely to weaken further

Investors are looking for any signs to sell up in the event the UK shows signs of a recession, data releases are therefore far more impactful on Sterling than they would have been if the UK opted to remain in the EU. Retail sales and PMI figures although preliminary, are the first economic releases to hit the UK post-Brexit which point towards economic contraction.
Tomorrow’s GDP figures, if negative, will most likely impact the Bank of England’s decision in its next interest rate decision in August. A rate cut could push Sterling lower down the chain.

Brexit means Brexit

Echoing Theresa May’s “Brexit means Brexit” gives little to reassure what Brexit actually means, or when it will occur. Will the UK take the soft approach and except lesser membership from the EU in exchange for free trade? Or will the UK close its borders entirely and look to set up free trade agreements with other nations?

Either way, until certainty is restored, businesses and consumers alike are not willing to spend, and this will have a knock on effect on growth.
Those holding Sterling in the hopes of a miracle, it’s likely Brexit won’t happen until at least 2019. With so much at stake, making a transfer now could well be the appropriate option.