we already know, the UK has definitely decided to leave the EU. Our study is
about understanding and predicting the impact of that decision on UK’s exchange
rate in the short and long run. Below are different writings and proposed
literature related to our topic that we will try to describe and evaluate based
on our objectives and hypothesis of study.
Journal of Financial Research
Discussing the terms of exit
is still in a primary state with many unknown results and consequences. Directly,
after the referendum, the value of the British pound fell against the euro and
dollar and has kept on decreasing compared to the period before the brexit
referendum. But the UK has definitely decided to take the step of leaving the
EU even though the future terms to which it will be subject are still not
known. Globally speaking, Brexit has involved worldwide attention, getting
support from some countries and becoming a serious issue from EU citizens, and
some businesses. And many industries, bankers and economists have gave their
opinion concerning the outcome of the Brexit. Even though there are lot of
views regarding the future of UK, in the best of our knowledge, there is no
formal publication or written agreement that can tell us exactly what may
happen to the UK after the Brexit. There are surely other aspects which effect
exchange rates, be it the supply and demand requirements associated to a
country’s balance of trade, the level of political uncertainty as well the overall
economic performance of a country in relation to others.
A British online
newspaper Published on 23rd, August 2017.
The pound sterling collapsed to an eight-year low against the
euro, one pound was buying at only €1.0833 the last time the pound reached that
level was in 2009 and UK economies is still unstable. The Government hasn’t seemingly made much improvement in
EU negotiations about the terms of separation which is leading the UK into a
period of uncertainty.
The same newspaper Published
on 11th, August 2017,
Morgan Stanley, a financial
service firm is expecting one euro to worth more than one sterling for the
first time. Political uncertainty is increasing and economic growth has been
quite weak which is going to weaker the UK currency even more in the days to
A British website on city
and business news published on 29th, March 2017.
UK path out of the EU and
the start of Brexit has lead the pound to fall against
other currencies like the euro, Australian or dollar US dollar.
As it was expected, the
British pound fell against the euro when Theresa May activated the Article 50, but GBP exchange rates soon recovered.
The GBP/EUR exchange rate
has been fluctuating between €1.143 and €1.159, GBP/USD has recovered from lows
of $1.237 to trade at $1.242 and GBP/AUD has been holding steady at AU$1.622.
What are we expecting
from the UK currency?
It depends mainly of UK
negotiation about the terms of the Brexit. If it goes well then British pound
might gain strength otherwise, the UK currency may be in serious troubles.
A national British daily
broadsheet newspaper published
on 22nd, September 2017
the UE in not without cost. Theresa May said that the UK will respect its
financial obligations to the EU and is looking for a period of transition which
will be of 2 years.
Sterling dropped as Theresa May
spoke and rise back finally it began its fall again, finishing the day 0.7%
down against the euro and 0.4% lower against the dollar.
Pound to Euro Spot Exchange Rates for 2016 and 2017 from the Bank of
England. Below are tables that show the
exchange rate’s course. We could not draw tables for all the months from
January to December. We have selected some specific months so that we can
observe what is happening.