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Brexit. Article 50 Triggered

30 March 2017PoliticsEuropeUK
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On June 23rd 2016 the people of the UK unexpectedly voted in a referendum for the UK to leave the European Union (Brexit). It has taken 9 months to reach today, with a change in Prime Minister and a number of senior cabinet members.

In October 2016 the UK government promised to trigger Article 50 by the end of March. On Wednesday 29th March the government delivered on their promise with the historical act starting the two year negotiation period on how the UK will leave the EU. The market had eagerly anticipated the formal announcement; however the act itself was very much anticipated and there has been limited reaction to this in the market.

Investors were closely watching PM May's announcement in Parliament on Wednesday for potential guidance on the expected tone the UK will take in the negotiations. Previous sound bites from May such as "No deal is better than a bad deal" had weighed on GBP. PM May emphasized the unity of the UK, which is likely in response to the Scottish National Party (SNP) calling for a second Scottish referendum. European Council President Donald Tusk provided an initial response to Article 50, in which he vowed to defend the interest of the remaining 27 states. Overall with no surprise in the announcement, markets have been rather calm to this news so far.

Citi Analysts believe that the triggering of Article 50 "sets in motion an unprecedented, unpredictable set of events which will determine the UK's economic health, for the foreseeable future"

The two year timeline is likely to be fraught with political volley, due to number of EU members, and the differing starting positions for negotiations. Citi analysts expect GBP to remain under pressure until there is more clarity on the trade policies and other issues for UK outside EU.

GBP/USD is down 0.17% on the day (1.2427), with the FTSE 100 near flat at 7,340.13 .

For further information on how this might impact your investments, please contact your relationship manager.

Source: Citi Analysts | The day Article 50 was triggered 29 march 2017

Reuters Eikon 14:50 29/03/2017

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Joe Bond

FX Counsellor

Prior to joining Citi as an FX Counsellor, Joe joined Citi after four years as the Director of a start-up FX broker. His earlier roles were as an FX Dealer based in London and the Middle East. He is a keen traveller, and enjoys skiing each season.

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