Yesterday Sterling fell then jumped against the Euro as news emerged from a Senior Government Official that Theresa May could be preparing to offer an alternative to the current Irish border stalemate. More on the potential new plan with an update on the Conservative Party Conference that continues this week in the market report below.
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The new plan is thought to revolve around some checks taking place between goods coming from Northern Ireland to the British Mainland, but essentially keeping NI in the EU Customs Union. Should there be progress on the Brexit deal, and the current impasse resolved then Sterling could rally significantly.
The start of this week has seen the Conservative Party Conference take place which many suggested would be a rocky event for the Prime Minister. Other than Boris Johnson who chose to criticise the Prime Minister speakers over the weekend and yesterday have declared their support for the Prime Minister.
Chancellor Philip Hammond today highlighted the importance of being able to change, and said that the UK needs to show unity along with strong leadership post Brexit. This was certainly the Conservatives positioning themselves for an election once Brexit talks are over.
The markets haven’t appeared to react too much to what’s being said at the conference but that tends to be the case when the Cabinet support Theresa May. The immediate risk of a leadership challenge appears to have cooled as support for the Prime Minister seems to be growing.
There are still calls from MP’s for a second referendum, however if the rumours of talks progressing past the current stalemate are true then the chances of a second referendum could entirely disappear.
In my opinion if you’re looking to buy Sterling it might be worth looking to trade at the current lows. Hammond in his speech today pointed out that the UK economy would receive a boost if a deal was agreed and this could no doubt come with a Sterling currency spike. Defending Theresa May’s Brexit plan the Chancellor reminded the room that in 1878 people had the same concerns surrounding the success of the light bulb.
Tomorrow afternoon sees the major release this week for the UK in the form of Services PMI data, there is expected to be a slight drop from the previous month, however the level would still be positive at 53.9. Any deviation from this expectation, or if we see any major developments in the Conservative Party Conference there could be market volatility, make sure you’re in contact with your trader so you can be kept up to date.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.
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