In my last post I said how I had opened an Icelandic Krona (ISK) account at my local bank to act as a receiving account. I was thinking that on a day just like today when the Pound has jumped in value I could transfer my Pounds into Icelandic Krona and avoid any loss in value following the activation of Article 50.
Yesterday I got this letter from my bank.
The interesting question is “What is going on with the Icelandic government and the UK?” Iceland has relatively recently relaxed its capital controls somewhat but that shouldn’t be a factor here as I wanted to take money into Iceland not take it out.
A couple of years ago you could not buy and Icelandic Krona outside of the country as their government had blocked all exports of physical cash. That cannot be a factor here as I didn’t want any actual cash, this was purely electronic money.
So where does this leave me?
As I will not know how much money (ISK) I need until the 3rd or 4th of April there is no way I can forward buy my currency before the 31st of March Article 50 deadline. I am going to simply have to chance it and hope the markets are ready and prepared for the big day. There is no reason why the financial markets should panic on the 31st. We all know it is going to happen. If Tuesday was anything to go by the simple fact that Article 50 will then be an actual fact and not a looming possibility should put a little more certainty into the markets.
The reason the Pound picked up on Monday/Tuesday is because Theresa May’s speech ruled out many possibilities. If the UK is not going to ask for access to the single market then the EU is not going to press for it. If the UK does not want to be part of the customs union then the EU is not going to press for that either. Free movement of people is a requirement of single market access but that is now not an option nor up for debate. Whilst the speech was mostly wishful thinking and unfounded optimism the fact that it ruled out many possible scenarios removed some of the uncertainty about the final shape of the Brexit. As always it is lack of certainty that scares the markets and hits the value of the Pound in your pocket.