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> Brexit

Is The Mist OF Brexit Starting To Clear?

The GBPUSD rate will

be between 1.10 and

1.30 depending on the

Brexit agreement and

or any transitional

arrangements made.

City commentators in London are forecasting that the GBP should recover to around 1.30+ if

a sensible approach is taken by all parties involved in the Brexit negotiations and a realistic
transitional arrangement is put in place. However, if common sense does not prevail, we

could be looking at a move down to 1.10. Plenty of scope for the commentators to be

correct there then!

Pity those businesses with significant GBP/USD transactions to complete in the next couple

of years. Once the UK government formally signals its intention to leave the EU, by triggering

of Article 50, there is a set two-year period after which the UK leaves, with or without an
agreement on the terms of its exit.

Almost everyone, outside of the government, seems to agree that reaching a good, for all

parties, deal within this timescale is virtually impossible.

The EU Vice President Jyrki Kataine said, on Monday February 6, that "a little miracle" would

be needed for Britain and the European Union to complete negotiations on Britain's exit in
the two-year timeframe.

This raises questions from a currency perspective, particularly if we reflect that uncertainty is

one of the prime drivers of current GBP weakness.

In theory at least, the relationship between the EU and UK will default back to World Trade

Organisation (WTO) rules if no agreement is reached.