Last week the Pound to Euro exchange rate hit its highest level so far in 2017 despite the beginning of the Brexit being just around the corner.
This is a promising sign for those hoping the Pound will recover and return to it’s pre-Brexit levels, and those investors will also have been buoyed by the bullish price forecasts for the Pound from Morgan Stanley over the past weekend.
Over the past weekend analysts at Morgan Stanley suggested that the Pound is ‘the most undervalued major currency in the world and will rebound to its pre-Brexit levels’. The analysts also added that both the invocation of Article 50 and the risk of the UK leaving the single market without a trade deal in place have already been priced into the market.
The bullish outlook from Morgan Stanley differs to many analysts predictions this year which generally envision a fall for the Pound as the Brexit process begins.
Personally I think that trade negotiations between the UK and EU, particularly regarding the rights of Brits within the EU and the rights of EU citizens in the UK, will take center stage and be a key talking point over the next few months. Talks along these lines are likely to impact Sterling’s value and there is already talk of UK PM, Theresa May will announce the end of free movement for new EU migrants on the same day she formally triggers the Brexit.
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