The UK will leave the EU at midnight on the 29th March 2019 after Theresa May finally triggered Article 50 at the end of March. Since Britain voted to leave the EU almost a year ago, the pound has witnessed some turbulent times, with some large knock-on effects. In this post, we’ll take a look at what has happened to the value of the pound since the vote, where it’s at now and how this impacts on foreign exchange.
How Did the Pound React to the Announcement?
Immediately after the announcement that Britain would leave the EU, the pound fell to lows not seen since 1985. At one point during results night, it fell by 10% due to the unexpected nature of the result. By early afternoon on the day after the vote, it had recovered slightly, but was still down 8% on the day. However, the economic outlook has improved significantly since, and the economy has largely confounded pessimistic “doom and gloom” expectations from several major analysts, including the Bank of England.
Instead, the UK’s economy grew by 1.8% in 2016, second only to Germany’s 1.9% among the world’s leading G7 nations, according to the BBC.
However, although the economic crisis threatened by David Cameron, George Osborne and other prominent remain supporters never materialised, not all of the post-Brexit news has been positive, and inflation has risen to its highest rate for three and a half years.
Where is it at Now?
As for the rate of the pound itself, we’ve seen a significant rebound in value since Article 50 was triggered and a snap election was announced. However, the FTSE has dipped on the back of downbeat growth data.
Last week saw the pound reach a six-month high after Theresa May announced a general election to be held in June. In a volatile day of trading, the pound hit a three-week high against a week dollar in early trading. However, when told that the Prime Minister was making a statement that’s contents had not been pre-briefed, the pound slipped back.
When announcing a snap election, the value of the pound jumped by 2.37 per cent against the dollar, which marked its highest level since October. At the same time, the pound also jumped to a four-month high against the euro, climbing by 1 per cent on the day.
Surprisingly, it also passed through its 200-day moving average for the first time since the EU referendum and Britain’s historic Brexit vote last June. This has been seen as a key resistance level for some time and major banks such as Deutsch Bank have raised their sterling forecasts accordingly.
What Does this Mean for Foreign Exchange?
At present, a strong pound is excellent news for those looking for foreign exchange for their summer holidays or ventures abroad. Those using specialist online services can currently get great rates as the pound rises against both the dollar and the euro and continues to look strong with a positive medium term outlook.
Even bureau de changes and banks are offering improved rates than they were several months ago, as the pound now stands at a seven-month high against the dollar. If you’re looking for foreign exchange, now seems like the perfect time to make the exchange.