Pound to jump significantly after article 50

The British pound has fallen for the first time in 3 days today after a round of local data missed expectations, but some predict that this is just a temporary bump in the road and the currency is still drastically undervalued.

The British currency was trading at $1,2448 against its US counterpart, down from $1,2587 at close of trading on Monday.

Data released earlier yesterday showed the Markit’s factory Purchasing Managers Index fell to from 54.5 to 54.2 last month, well below analysts’ expectations for a number of 55 and marks the 3^rd straight month of declines.

The figures although disappointing, are not that worrying, as they have remained above 50 in recent times which shows the sector is still in expansion mode and business confidence remains high.

“The slight fall in the UK manufacturing PMI in March suggests that the sector saw a modest slowdown in the first quarter. But the bigger picture is that the sector is still performing well by recent standards,” said Paul Hollingsworth at Capital Economics.

Martin Beck, lead economist at Oxford Economics believes now, with article 50 out of the way, the EU and the UK will make a deal which is promising for both parties which will be the catalyst for the British pound to trade significantly higher as the year unfolds,

“We see risks of an overshoot to our forecast in the intervening period, there is more than a reasonable chance that pragmatism will prevail and cliff-edges will be avoided given the potential costs to both sides if no agreement is reached.” Mr Beck said.

The review was prepared by FIBO Group analyst Andrew Masters.