Today, when Theresa May triggers Article 50, Britain will become the first country to exit the EU.
The Prime Minister announced at a Conservative Party conference that she intended to give the notification by the end of March 2017.
What is Article 50?
Article 50 of the Treaty of Lisbon became law in December 2009 and was designed to make the EU “more democratic, more transparent and more efficient”.
It was signed by the heads and state and governments of countries that are EU members.
The law states that “any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements”.
This state would need to notify the European Council of its intention and the Union shall negotiate and come to an agreement with the state.
This will set the future framework between said state and the European Union.
What does this mean for the sterling?
It’s been a rocky road for the pound ever since the Brexit result was revealed following the referendum on June 23.
The aftermath saw a massive drop in the worth of the pound – and it has struggled to climb ever since.
It’s likely that sterling will remain volatile against the world's major currencies.
Following today's invocation of Article 50, Paresh Davdra, CEO and Co-Founder of RationalFX, told Daily Star Online: “After a relatively positive start to the week the pound has stumbled as Prime Minister Theresa May invokes Article 50.
"As the Prime Minister signed the letter formally notifying the European of the UK’s intention to leave the EU – the pound slid despite the strength it had shown against the dollar and the euro in the past few days.
"As anticipated, analysts can expect a number of fluctuations in sterling in the days to come."
He continued: "With the prospect of Brexit long since affecting the pound, there is a chance that triggering Article 50 will not have as extensive an impact on the currency as the referendum result.
"Furthermore, the possibility remains of a rise in the pound as negotiations get underway, as seen earlier in the pound’s rally when the Prime Minister initially announced the date of triggering Article 50, and also due to the fact that markets will have more details over the nature of the UK’s departure.
"Analysts and investors will be watching very closely at how the pound reacts over the coming days.”
The pound began this week with a seven-week high against the US dollar which leapt to $1.26098 to the pound. The pound was also up against the euro by 0.3% to €1.15713.
Simon Philips, Retail Director of Britain’s biggest high street travel money specialists No1 Currency, said: “Sterling has ticked upwards agains the euro this week, but its most impressive gains have been against the dollar – reaching its highest level for nearly two months.
“In part this is due to the exchange rate markets’ relief that the Brexit phoney war is ending.
“But for all its historical significance, Theresa May’s Article 50 letter is merely the end of the beginning."
However, once May triggers the law that will begin Britain’s two-year countdown to leave Europe, this will not go unnoticed.
While there may not be a significant impact right away, it will be the EU’s response in the coming days that will be more telling about the future of the sterling.
The CEO and co-founder of RationalFX, Paresh Davdra, told the Daily Star Online: “Sterling is expected to witness fluctuations ahead of Wednesday’s triggering of Article 50.
“Whilst there may not be a slump as dramatic as witnessed in the immediate aftermath of the Brexit vote, the continuing uncertainty around negotiations could see further volatility in the strength of the pound for the foreseeable future.
“Another crucial notion is whether or not the pound will be able to recover once Article 50 is triggered, as some analysts predict that parity with the dollar or even the euro is within sight."
Simon added: “The hard work of Brexit negotiations starts now – and with everything still to play for, the resulting uncertainty will continue to make exchange rates prone to big swings.
“Trying to second guess which way exchange rates will move in future is almost impossible, but there are ways that holidaymakers can be savvy when buying foreign currency.
"When changing your sterling, always shop around for the best rate.
“Alternatively, if you’re yet to book a holiday, you could consider going somewhere further afield than the Eurozone where your Pound will stretch further.”
