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You are here: Home / British Sterling / What will happen to the Pound now?

What will happen to the Pound now?

June 28, 2016 by Rob Lloyd

uk-flag-paper-boatI see a number of challenges ahead which are bound to weigh on the pound. A weak pound creates problems for clients and business buying property and goods from overseas. A weak pound does however create opportunity since anyone coming back to the UK or any business being paid in a foreign currency does better.

A weak pound is good for exporters as it means UK products and services are much more attractive. Despite the Referendum vote we are a long way from leaving the EU. There is no Brexit until Article 50 is invoked and there is plenty to change the course ahead of this event. Article 50 is the legal trigger for a country to leave the EU and must be invoked by the country leaving. The EU is now putting pressure on Cameron to invoke this but he has slipped through the net by resigning, will Boris Johnson take up the challenge? If not who? At the moment no one is lining up to put their name to pressing the button on this vital decision.

There are also the unanswered questions of managing the interests of Scotland, Ireland and even Wales, will the regional governments mount a challenge? There might be a snap General Election which might see the issue once again put to the people. I expect the UK economy to perform badly owing to the lack of confidence and personally would not rule out the Brexit plan backfiring due to lack of support and lack of clarity over exactly how it will work in practice. How will the Leavers balance commitments on Immigration against a desire to keep the UK in the Single Market? In short there are no hard fast answers which will create lots of uncertainty for the pound and the UK economy.

Strap yourself in for many more months of uncertainty as we all scramble to make sense of these pressing issues. Ultimately I would hope common sense to prevail and a deal to be struck that helps keep our European friends and trading partners onside whilst eliminating the noisiest and unhappy people in the UK. Unfortunately trying to find a ‘happy medium’ which pleases all parties is no easy quest and should see the lack of clarity persisting on exchange rates and the UK economy for the rest of 2016

Brace yourselves, Sterling may remain on a bumpy path for an extended period of time.

Filed Under: British Sterling Tagged With: Brexit, EU Referendum, GBPEUR, Pound Sterling weakness

The information on this website is provided for information purposes only. It does not constitute advice to any person on any matter. Every reasonable effort is made to ensure that the information is accurate and complete but we assume no responsibility for and offer no warranty with regard to the same.

About Rob Lloyd

Robert brings with him a wealth of knowledge on what is impacting exchange rates, especially around the subject of the EU Referendum and the implications for Sterling and Euro exchange rates.

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