How Will Brexit Negotiations Effect the Exchange Rate

It has been another rocky week for Sterling exchange rates, with inflation on the rise and the UK still politically unstable, it really remains unclear about what happens next. Current UK PM, Theresa May is still yet to formally announce her deal with the DUP (though there seem to be rumours about talks with the Lib Dems now as well), I don't think the Pound will rebound until the Queen's speech takes place (this Wednesday).

Bank of England's interest rate decision

Earlier last week, the Bank of England's interest rate decision caused the Pound to gain about 1% against major currencies after BoE members 5-3 on keeping rates on hold, (Expectation was a 7-1 vote)- the translation of this vote basically means that we now seem to be closer to a rate hike than ever. The reason for this is the current inflation rises we are seeing in the UK and the lackluster wage growth alongside it. My only concern is that we will be raising rates solely to curb inflation, not because our economy is stable enough for it, and this could end up badly in a year or so from now- But I will write more about this as we get closer to an actual hike.

So... How Will Brexit Negotiations Effect the Exchange Rate

Onto this week, the most important event (Apart from Wednesday's Queen's Speech) will be Brexit negotiations formally starting on Monday. Now, the Prime Minister has explained previously she will not be constantly updating the public about how negotiations are going, however, I feel that the EU will do the complete opposite. This means that we may start to see pretty biased news coming out about these negotiations, obviously in favour of the EU, which could cause the Pound to weaken from time to time. Now it is also important to point out that these negotiations will take at least 2 years, so Monday is not a one-day event- it is ongoing volatility.

Short term, we will see the Pound move around 2-3% up or down due to political events and economic data, however, the long-term move really does rely on Brexit negotiations, so the Pound will be extremely sensitive to any news that comes out surrounding this.

This could potentially be a positive week for the Pound, (Ignoring Brexit headlines), however, it is exactly these headlines that could keep Sterling subdued even if the Prime Minister manages to organise her Government effectively.

So if you need to buy or sell sterling and would like to be kept up to date with all the latest data releases and exchange rate movements then feel free to contact myself Ben Amrany. If you are buying or selling a house in France we will make sure your monies are in the right place at the right time, we work hand in hand with you and Cle France.

Current rates:

Monday 19th June 2017 at 16:45

£1.00 GBP = 1.1411 EURO

£1.00 GBP = 1.2739 USD

£1.00 GBP = 1.6755 AUD

£1.00 GBP = 1.7585 NZD

£1.00 GBP = 1.7585 CAD

£1.00 GBP = 16.4856 ZAR

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Ben Amrany from FC Exchange follow this link or phone and ask for myself and quote "Cle France" on 020 7989 0000.

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