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Brexit Talk Pushes Sterling Even Lower – Dollar/Euro Parity Unlikely

October 7, 2016

Brexit Talk Pushes Sterling Even Lower

The lady’s not for turning.

Since Sunday’s announcement, when Theresa May confirmed her government will invoke Article 50 and begin the Brexit process before March 2017, the Pound has taken quite a pummeling on the markets.

Falling to a 31 year low against the dollar, touching $1.2624, and reaching as low as 1.10189 against the euro. Fears of what a Hard Brexit might mean to the UK clearly prevail, and May’s tough words have done little to ease the concerns of not only UK residents, but also expats, businesses and investors.


theresa-may

As you can see in our Trends graph below, the pound been on a consistent slide. According to Kathy Lien at Investing.com, the strength of the dollar also contributed to the week’s GBP drop, but parity with either the USD or Euro may not happen, despite the 5 year low against the latter – it’s been 45 years since sterling traded at parity with either.

gbp-eur

“For GBP/USD to hit parity, it would need to fall another 20% and for EUR/GBP to reach that same value, it would need to rise 14%.”

Given how fast sterling has fallen in the past month, [parity] does not seem implausible, but for that to happen, the process of Brexit would need to decimate the U.K. economy.

As with June’s Brexit vote itself, CurrencyFair will remain open during times of turbulence so you can make the best of the situation, or simply exchange currency easily, cheaply and as speedily as always.

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