Since the Brexit negotiations started, the pound has had a rough time. During the past two years, the pound has been on a roller-coaster ride with sterling affected by political uncertainty and fears of Britain not agreeing on a deal with the EU on time. So what impact has Brexit had on the pound?
What impact has Brexit had on the pound?
The pound to euro exchange rate slumped following the most recent Brexit vote in Parliament on Thursday, February 14.
At the time of writing, sterling is trading at €1.1410 against the euro, according to Bloomberg.
On Thursday, amendments by Labour and the Scottish National Party were voted down by members of the House of Commons and in a further blow to Theresa May, MP’s rejected a motion in support of the PM’s Brexit strategy by 308 to 258.
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Ian Strafford-Taylor, CEO of currency expert, FairFX said on Friday: “Following Theresa May’s fresh defeat last night, there is still a lack of clarity over how Brexit will play out.
“With multiple options still on the table, the UK still faces a lot of uncertainty over exactly how it will leave the EU.
“Uncertainty is, without a doubt, one of the biggest causes of volatility for currency.
“The pound is yet to return to pre-Brexit rates against the Euro, and today it’s down 13 percent against Euro compared to the day of the referendum.
“That means holidaymakers heading to Eurozone destinations are now getting £147 worth of Euros less for every £1,000 they exchange.”
The immediate effect on the sterling following the Brexit referendum saw the British currency decline sharply in value.
And as the vote on the UK’s withdrawal deal from the EU looms, further volatility is expected.
In recent years, traders have been looking at politics, rather than economic data, which means faster trading, and a faster pace of change in the price.
Jane Foley, senior currency strategist at Rabobank told the BBC: “If you think abut political uncertainty being bad, the worst outcome is a hard Brexit.
“If that’s the worst case scenario, it [the pound] will rally if hard Brexit seems unlikely.”
And with the UK scheduled to depart the EU on March 29, which is less than two months away, the talks over the next few weeks will be crucially important on the pound’s worth.
For now, traders are expecting the pound to remain volatile over the coming weeks as Brexit uncertainty continues.