With the currency markets moving every two seconds, it can be vitally important to be aware of what is driving the currencies in or out of your favour. The below table shows the difference in a number of currencies if you were buying £200,000.00 during trading hours on 06.12.17.

Currency Pair% ChangeDifference on £200,000
GBPEUR0.6%€1380
GBPUSD0.6%$1560
GBPAUD0.95%$3440

Sterling Volatile Whilst Brexit Discussions Continue

Brexit negotiations progressThe Pound continues to remain extremely volatile as Brexit discussions continue behind the scenes to try and reach agreement over the Irish border. The outlook did appear relatively positive with the expectation that an agreement would be reached but developments from yesterday would suggest otherwise and this is being reflected in a volatile Pound. Brexit secretary David Davis appeared bruised when he admitted that there are no Brexit papers whilst Chancellor Philip Hammond was criticized after he effectively offered to pay the divorce bill whether there is a deal or not.

The Democratic Unionist Party (DUP) is rejecting “regulatory alignment” between Northern Ireland and the EU, something that is also being resisted by other members in government. DUP leader Arlene Foster spoke with the Prime Minster yesterday although there is still no movement. The DUP will not allow a border to develop in the Irish Sea whilst they also fear that Ireland may seek to use Brexit as a way to pursue a united Ireland. There is still a real risk of a no deal scenario.

Those clients holding Sterling could see a window of opportunity for buying other currencies if an agreement is reached which will allow talks to move on to phase 2 which will focus on the future trade arrangements. A break through is likely to have a positive impact on the price of Sterling although such gains are likely to be limited due to the fact that no final agreement will ultimately be signed until March 2019. This leaves a long period of uncertainty for the UK and should keep the pressure on Sterling.

The trade discussions are expected to be some of the most complex to navigate and this also leaves a cloud of uncertainty over the UK. Clients looking to buy Euros or dollars would be wise to be in contact with your account manager in preparation for developments which are expected imminently. The risk of course is that if no agreement can be reached then Sterling faces the danger of a sharp fall across the board.

UK Data this Week to Impact GBP

UK house price data from the Halifax are released this morning and should give more clues to the strength of the housing market. With potential falls of around 20% being mooted in the London housing market then any reflection of this in the official data in these coming weeks and months could have a damaging impact on the British economy and hence Sterling. The housing market is one to watch at the moment as it is usually both construction and housing which are the first areas to have problems before a downward turn in the economy.

The National Institute for Economic and Social Research (NIESR) release their Gross Domestic Product estimate on Friday afternoon. The numbers are well regarded as an excellent precursor to the official data released in due course. There can be a sizeable market reaction on the back of the estimate which could make for an interesting end to what has already been an immensely volatile week for Sterling exchange rates.

Thank you for reading today’s market report, please feel free to get in touch for more information on how the above factors could affect your upcoming currency transfer. You can call 01494 725 353 or email me here.