The pound has had a rough time since Britain voted to leave the EU on June 23, 2016. Since the Brexit negotiations started, the British currency has been on a roller-coaster ride. So will the point strengthen once a Brexit deal is agreed?
Will the pound strengthen once a deal is agreed?
As a deal has not been agreed yet, the pound is still facing uncertainty and volatility, particularly with mounting concerns about a no deal scenario.
No experts can predict exactly what will happen to the British currency as Brexit quickly approaches, and it’s important to remember there are other factors that affect the pound’s value.
However, a currency expert has tried to explain the impact on the pound as thing stand now.
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Ian Strafford-Taylor, CEO of currency expert FairFX said: “It’s possible that the pound will strengthen if the UK and EU can agree a divorce deal, but it all depends on the deal itself.
“If the market feels the deal isn’t economically favourable to the UK, then we could even see the pound lose ground.
“The most likely way we could see the pound strengthen is if a deal is agreed that is economically favourable to the UK.”
MPs returned to the House of Commons on January 29 to vote on a number of proposed amendments to Prime Minister Theresa May’s withdrawal plan.
Parliament voted in favour of the Brady agreement, backed by the Prime Minister, which gave Mrs May the mandate to re-open talks on the Irish backstop – one of the most complex issues of the Brexit negotiations.
One of the biggest concerns is that there will be no deal, and Britain will leave the EU on March 29 without any agreements in place.
And as pressure mount for the Prime Minister to strike a deal with Parliament, the pound suffered a setback, dropping by 0.6 percent against the euro after its steady recovery from the meaningful vote that rejected Mrs May’s initial withdrawal proposal in December.
And the pound remains volatile.
The pound was in recovery mode this weekend, looking to take back some lost ground after sterling was stuck near one-month lows on Thursday, following a further blow to Theresa May, when MP’s rejected a motion in support of the PM’s Brexit strategy by 308 to 258.
The final three months of 2018 also demonstrated a reversal in the direction of the British economy as the growth rate declined quarter-on-quarter to 0.2 percent.
Overall, the GDP for 2018 has fallen to its lowest since 2012 at 1.4 percent.
This is down by 0.4 percent compared to 2017.