Article 50 was triggered by PM Theresa May, causing a strengthening of the pound against the euro with exchange rates breaking through 1.17 Some sources are reporting that the EU and the UK have negotiated a €50 billion settlement ahead of upcoming Brexit talks. Nothing is official at this point however, and Westminster MPs are still open to further negotiations.
While the triggering of Article 50 is a big deal, Brexit negotiations will continue to make news for years, and we’ll be here to keep you up to date. Other events will also have an influence on the markets, such as the upcoming French election. Marine Le Pen, who is no fan of the EU, is moving up in the polls. She is expected to make it through the first round, which will only contribute to market instability for GBP to EUR exchange rates. Further, there is also the possibility that other countries may consider leaving the EU as well,which will only cause more instability in the marketplace.
The negotiation process for Brexit will move slowly, therefore I believe GBP will improve. Further, since the UK government has already revealed its positions, any fluctuations in GBP due to UK concerns are likely already built into the price. The EUR will likely avoid similar fluctuations over the short term for the same reason.
My recommendation for months for euro sellers who are buying pounds has been to take a wait and see approach to see what effect an Article 50 triggering would have on exchange rates. Now that it has happened, euro sellers should take advantage of the situation and trade while they can. With the coming French election and Greek debt repayment issues creeping back onto the scene in July, 2017 may be a volatile year for the euro, and the potential for profits will be less predictable and more difficult to come by. Traders should take advantage of the relatively stable situation while it exists,because it likely won’t last for long.
As long as there are no hiccups in the Brexit negotiations and concerns about the UK leaving the single market don’t arise, you could possibly earn a few more cents by waiting, but I can keep you better informed with up to date market information if you outline your position now.
Chart is taken from http://www.xe.com