The Pound suffered a torrid day yesterday as markets opened following a weekend of announcements regarding the UK and the EU. Sterling lost over 1% value against the Euro, whilst losing up to nearly 3% against other currencies.
With David Cameron having secured a deal with the EU late on Friday evening for the UK, many thought that Sterling would receive a boost in strength against the Euro. However, with Boris Johnson, announcing on Sunday evening that he would be joining the ‘Leave’ side for the upcoming referendum, we saw a major drop in the Pound’s value.
Boris Johnson, Mayor of London, is a very popular figure and his choice to join the ‘Leave’ campaign will no doubt influence much of the population in their decision at the 23rd June referendum. Combine this with the reaction of many other MPs in Parliament who appear to not have not been won over by the new EU deal, and this has led markets to believe that the chance of a Brexit is now that little bit more likely.
With nobody entirely sure what will happen if the UK were to leave the EU and how it will affect our economy and trade figures, we are left with uncertainty. It is this uncertainty that breeds weakness in a currency, as investors are unwilling to put their money into a currency whilst its future is not clear. Thus until a conclusion is reached and we know for sure whether the UK is staying or leaving, I feel that Sterling will see a sustained period of general weakness with volatile movements.
Over the next four months, we will see both sides take the lead in the race with momentum shifting between the two. This may well cause spikes in the GBP/EUR rate both ways. If you have Euros to buy then looking out for times when David Cameron’s ‘In’ team is ahead could prove beneficial. The opposite will be true if you have Euros to sell.
If you would like to kept informed of these movements then I would be more than happy to do so on your behalf. Get in touch with me at firstname.lastname@example.org and I will personally respond to you. Here at our brokerage we pride ourselves on offering exemplary service to clients along with getting you a better rate of exchange. If you already have a broker, please still get in touch and I can do a comparison of our exchange rates to show you how we may be able to offer more. Jonathan Worrall