Monday, 27 March 2017
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Weekly Financial Update

Right then…

This is the week the U.K. Government will trigger Article 50, signalling the start of Brexit. Well,we all knew this was coming, but it will take at least two years to get everything done and finalised. Within his time, there will be lots of amendments, arguments and differing of opinions.

So, what’s the opinion on the currency?

We are naturally asked that a lot. I think it’s safe to say that, although Brexit is fundamentally important, it’s certainly not the only thing that is influencing the route of the Pound. Economic figures are playing a major part. UK inflation, for example, has risen. This means there could be too much money against too little goods. Interest rates may have to rise, hence the pound being more attractive to investors and, therefore, creating more demand, making it rise.

On the flip side, if the market perceives the economic figures are negative for the Pound, then the ultimate move will be lower. Therefore, there is much volatility which, in itself, makes predictions difficult. However, it’s only fair we have a view!

Sterling fundamentally still looks a little weak. This is accentuated by market uncertainty and we still feel, over time, it will tick lower. Timescale on this is difficult, but we should look at the next target of 1.13 in the short term.

So, look out this week for Brexit announcements and the fallout that follows. It’s certainly not going to an easy week; so, hold onto your hats! Oh, and if we see above 1.16, it’s not a bad time to buy currency.

Have a good week!

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The Premier FX Team

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