Well, here we are. Britains went to the polls to decide whether to stay in the European Union, or to leave and go it alone. As we all now know, by a slim margin, BREXIT supporters prevailed; the United Kingdom will begin the process to exit participation in the EU.
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So what’s next? Currently, there are many pundits predicting further breakup of Europe and a decline in world markets. Others are basking in the glow of a vision for renewed British sovereignty and economic control. We will have to wait and see how it all shakes out, but for now, let’s take a look at how it’s affecting Pound Sterling.
As expected, after results of the referendum were announced, the Pound dropped 11% and world financial markets dipped dramatically. Both moved up briefly, but went back down as fallout from the vote intensified.
Volatility in the currency market will remain throughout the summer. David Cameron’s resignation casts further uncertainty until a new leader can begin negotiations with the EU. The U.S. presidential election promises to keep investors guessing. And, of course, a number of European Central Bank, Bank of England and U.S. Federal Reserve actions will cause rate fluctuations.
If you’re buying Pounds, a window of opportunity has opened. If you’re selling Pounds, all is not lost; we expect Sterling to return to pre-referendum levels…but you may need to be patient a few weeks.
The bottom line, numerous factors can affect markets on a day-by-day basis. For your currency needs, contact a Premier FX Account Director to discuss options based on your particular circumstance.
Premier FX is authorised by the FCA (530712) and regulated by HMRC.
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This article was updated on the 27th of June, 2016.