Unless you have been living in a cave Article 50 has been triggered. Brexit is underway. Sterling fell on the announcement, then rallied. Much as it does most days. All the moves had been priced in. Slight anti-climax for markets? Perhaps. I would opt for a feeling of relief. For now.

Theresa May, the UK Prime Minister, has opted for a strong stance and bullish language in the run up to triggering Article 50. She has had no other option as she has had to make the right noises. However, I feel now that the letter has been sent to Mr Tusk we will see a slight softening in her approach and language to try and achieve a ‘soft/hard Brexit’. Hopefully the awful phrase ‘Brexit means Brexit’ is consigned to history now. The negotiations will start in earnest next month. At present the fighters are in the changing rooms limbering up. Once the music starts playing at the end of April at the EU summit we’ll have a better idea of the shape the fighters are in. Once the bell rings for Round 1 next month we’ll see who lands the early blows or if it is a case of sizing each other up.

As mentioned above Sterling fell on the triggering of Article 50 and has then proceeded to jump higher than a kangaroo on a trampoline. There seems to be some life in dear old Sterling.

You can view the moves on GBP/EUR last week on the graph below –


Where is Sterling going against the EUR? Are we due to target 1.15 the figure? Or is Sterling feeling revitalised with Spring in the air and is a push to the upside and 1.20 the figure realistic? Sterling has some weight behind it for the moment. I would expect some incremental moves higher with 1.18-1.19 looking toppish for the month ahead. If you have a requirement to purchase Euro’s this month please contact myself or the trading team for a SPOT price. I would also suggest considering implementing some market orders on the basis that we may see some further moves higher. Please contact the trading team to discuss appropriate levels to aim for.

From May onwards GBP may be under pressure so do also consider locking in some Euro’s this month on a Forward Contract. It takes risk off the table for the next 3/6 months whilst we ride out the initial phase of negotiations. You know what my favourite phrase is – “Doing nothing is speculating”. Please do consider at least covering off a portion of your exposure so you have a percentage of your exposure protected against any downside moves. If you would like a rate of exchange please contact our Trading Department.

We have the French elections this year and whilst I don’t think we’ll have any shock wins, although everyone said that about Trump and the UK referendum, this will add to volatility for the single currency. Theresa May also has a domestic battle on her hands with the Scottish Government requesting another referendum. The country needs that like a hole in the head at present.

Politics is going to continue to dominate for the foreseeable future. This opens up larger short-term moves on announcements that can quite quickly change the direction of a trend. Please make sure you are suitably protected.


The majority of the markets focus has been on the UK and the Eurozone for the past couple of weeks although with President Trump being well, President Trump, he and the US won’t be out the news for long. Indeed, this week we have the FOMC meeting on Wednesday and should this be slightly dovish we can expect some Dollar weakness. Has the call for Cable (Sterling/US Dollar) to target under 1.15 retreated for good now? Potentially. I would expect some short-term upside on Sterling/Dollar with a move above 1.25 likely. If you have a requirement to purchase US Dollars it may be an idea to implement market orders at 1.25 the figure. Please contact myself or the Trading Department to implement a market order.

You can view the movements last week on GBP/USD below –


It is a fairly quiet week on the data front with the main release coming from the US on Friday with the NFP (Non-Farm Payroll) figure out. Expectations are for a figure of 180K+ jobs for March printed. Should we see a figure under this then this should provide further weakness for the Dollar that will shift us back above 1.25.

On the flip side, should we see a healthy figure then this could translate to a bout of Dollar Strength and with Sterling likely to prove erratic for the near term then it really is a case of protecting yourself by executing your exposure and having a plan in place to mitigate your currency risk.

If you have any questions please do not hesitate to get in touch.

Have a fantastic week

Written by Liam Alexander

written by

Liam Alexander

Liam Alexander is the CCO at Aston Currency Management.