Brexit will limit the pounds gains
Published on 25.06.2018 15:37

The British pound is now on track to stage its 3rd straight day of gains after a bullish statement by the bank of England last week regarding interest rates but some say the big picture, namely the actions surrounding Brexit will keep the currency from sustaining any meaningful rally.

The European Union summit due to take place this week is seen as crucial to the pounds direction and all eyes will be on Prime Minister Theresa May and what type of deal she can negotiate to keep the Brexit process moving forward.

Any signs that the PM is losing the upper hand in talks is likely to see the British currency take a big hit as it could be the beginning of the end for any deal between the UK and EU which would see Great Britain crashing out of the block which has become known as Hard Brexit.

“The BOE gave sterling some support but that will probably peter out the closer we get to the summit,” said Georgette Boele, currency strategist at ABN Amro Bank NV.

 “It is a lot of back and forth in U.K. politics and that complicates negotiations with the EU,” she added.

Two of the largest employers in the UK namely Airbus and BMW have added fuel to the fire by noting that any type of Hard Brexit would put thousands of jobs in the UK in jeopardy and may force many companies to quit the UK all together which would be disastrous for the local economy.

“A no-deal Brexit must be avoided, as it would force Airbus to reconsider its footprint in the country,” noted representatives from Airbus.


Andrew Masters

Analyst

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