In the last few weeks, the value of the pound has seen notable fluctuations against the EUR and USD which, as any trader will appreciate, is something that can have significant bearings on your investments.

Here is a brief overview of the major events involved in these fluctuations and assess the cause behind the rises and falls. As well as this, we’ll consider what the current situation is and what future developments may be on the horizon.

Article 50

Having weathered stormy seas since the result of the UK referendum last June, the GBP understandably and expectedly dropped again against the greenback earlier this week as Theresa May was cleared by the Government to trigger Article 50 and begin formal processes to leave the European Union as soon as March 29th.

This came into play in addition to threats of a second Scottish referendum to be held by Spring 2019 from the SNP. This was bluntly refused by Theresa May yet left many nervously reconsidering their investment strategies and once more confidence to drop in the pound once more under suspicions that this may very well come to pass. The sterling fell more than 0.6% against the USD marking the lowest level since mid-January.

For many though, this wasn’t an unexpected turn of events. In the run up to this, there were several predictions this would be the case, as this post from Market Watch suggests. Craig Erlam a senior market analyst from OANDA commented at the time on how the pound was ‘coming under pressure’ with Theresa May’s ‘difficulty in passing the Brexit bill smoothly through the House of Lords’.

Dutch Elections

Moving forward though, only a few days after this, the pound was once again rising, thanks to the pending results of the Dutch election. This was due in part to whether or not right-wing candidate Geert Wilders was to be victorious. If so, the belief was that confidence in the currency would fall and also fuel ‘concerns that Marine Le Pen could win the French election in May’.

Employment Rises

Rises in UK employment have also recently buoyed the pound against the euro. Unemployment fell by 106,00 to 1.58 million making the jobless rate 4.7 per cent. This continues the relatively high employment rate the UK has seen and is ultimately contributing to the strength of the pound.

The Future…

All in all, the question on everyone’s lips this side of the pond is what will the future bring once Article 50 has been triggered.

According to research by Morgan Stanley, detailed in this post from The Financial Times, there’s a belief that although Article 50 ‘will not go unnoticed by investors’ the fact that it’s happening means that ‘a lot of Brexit uncertainty is not priced into Sterling’.

In other words, it means ‘there is scope for the pound to weaken against the Euro’ and any drops may not be as devastating for investors as previously thought. What’s more, the issue may not just lie with the UK; other political events across the EU could in turn devalue the currency, regardless of the impending Brexit.

Whether these forecasts are accurate does remain to be seen, however, it’s still a smart move to look to such predictions to help inform your investments.