Good morning. After a relatively flat week for Sterling last week, we open this morning with the Pound having plunged against other currencies. Against the Euro, rates have dipped into the low €1.14’s, and against the US Dollar, the rate is now in the mid $1.28’s, a fresh 31 year low.
Why has the Pound fallen against the Euro?
The fall in the value of the Pound is due to the Prime Minister Theresa May stating over the weekend that the UK will invoke Article 50 by the end of March next year, and start formal negotiations to leave the EU. This means we’ll have left Europe by the middle of 2019 at the latest. She states that the UK would make a good deal with the EU as an independent sovereign United Kingdom.
We knew this was going to happen at some point, so why has the Pound fallen so much today on the back of the news? It’s due to the fact that it’s now looking very likely that we will see a ‘Hard Brexit’, something that had been rumoured in recent weeks. This means that it’s likely the UK won’t even attempt to negotiate remaining part of the single market, instead choosing to leave it entirely in order to impose immigration restrictions. Unlimited immigration was a core reason many voted to leave the EU, and so this point had to be addressed by May.
A ‘Hard Brexit’ creates much more uncertainty than trying to remain part of the EEC, and this uncertainty is why investors have dumped the Pound today, and caused it to drop sharply in value. I have been warning for some time that it’s likely Sterling would fall further. Those that need to buy Euros in the next 6 months need to take stock of the new reality and decide what strategy to employ in terms of when to fix their exchange rate.
We can help private and business clients achieve much better rates of exchange than are usually available at the bank or other currency brokers. We also have a range of currency contracts available designed to avoid the kind of volatility we’re seeing at the moment, to ensure you don’t pay more for your currency that is necessary. If you need to make an international transfer or convert one currency to another, then click here or complete the form below to make a free enquiry to find out what rates we can offer you.