Posted by Allison on 25 July 2016, 14:18
The EU Referendum took place on 23rd June 2016. On Monday of that week, the pound stood at 1.2924 against the euro. This improved to 1.3055 ahead of the vote on Thursday. However, when the result became known in the early hours of Friday morning, the pound suffered. We always thought it would if Brexit became a reality, and by Friday night the pound had dropped to 1.2383.
Clearly, the weekend gave the markets time to think about the result and how it would affect the UK, not to mention the EU. Fast-forward another week, though, and the pound was lower still in the markets. It had dropped further to 1.1928. One week further on from that, the pound still hadn’t found its level ground. Instead, it dipped again – this time to 1.1731. So far, this amounted to a loss of around 0.1324.
July has been a bit more stable since then though. By the time the markets closed on Friday 15th July, the British pound had rallied slightly. Perhaps this was in response to Prime Minister Theresa May’s efforts to meet with some of the people in the EU to discuss the ramifications of Brexit and how and when Article 50 would be triggered to begin the formal process of leaving. Friday night on 15th finished with the pound up slightly on 1.2008.
However, nothing is certain at the moment and this was borne out by another dip that took place the following week. The pound was clearly going through the mill a bit, and this time finished on 1.1889. No one knows quite where it might go from here.
The picture has been somewhat similar against other currencies as well. The British pound stood at 1.4645 on Monday 20th June before rising to 1.4869 on the day of the referendum, when people thought we were going to stay in the EU. However, come Friday night that same week, the pound had dropped to 1.3704 – a fall of over nine cents. It fell as low as 1.2976 on 6th July, but it has since crept back to settle at 1.3095 at the time of writing.
Few will know whether the pound will recover eventually, but it is unlikely to regain those previous highs anytime soon. Perhaps when Article 50 is triggered and the process of leaving the EU begins in earnest, we can finally focus on the future and the pound will bounce back as a result. The sooner this happens the better it will be for everyone.
Of course, there are advantages to a lower pound – especially in terms of others doing business with us and of people from other countries coming here on holiday. To that extent, we should really make the most of this while it lasts, don’t you think?