Sterling remains at elevated levels against many currencies including reaching a 6-month high against the Euro, at 1.1682 on Tuesday of this week.
The pound has been stronger as no-deal becomes less likely, owing to the expectation that if it is a Conservative majority, the Withdrawal Bill should be passed. This doesn’t completely remove no-deal but helps ensure there is no immediate cliff-edge which was previously pencilled in for October 31st.
A Labour majority, or Labour coalition with Lib Dem or SNP (Scottish National Party) support, has been outlined to indicate a second Referendum, offering a revised Labour deal with the EU or Remain as the options. Again, this leads to an outcome that is not no-deal Brexit, and sterling is better supported from the possible outcome, as we know from prior experience, the increased likelihood of no-deal has previously triggered sterling weakness.
GBP/EUR rates are a great example of this shift in sentiment on the outlook over no-deal and Brexit. August 10th, 2019 saw GBP/EUR fall to 1.0647 on the interbank rate, testing the lowest levels since December 2008. This can be attributed to the higher expectation of no-deal back in August when Boris began to take over negotiations with Brussels.
Since that August low, to the high reached on Tuesday, GBP/EUR interbank rates have risen 9.72%. Will sterling rise higher on the UK election? This question will be answered in less than a month, but until then the market must take cues from the polls.
The 14th November Financial Times Poll of Polls tracker has shown the Conservatives with 39%, Labour on 29% and Lib Dems 16%, with the Brexit Party trailing on 8%. We know from the 2017, 2015 and 2010 elections how wrong the polls can be, if you have a transfer in the coming weeks or even 2020 involving the pound, now may be a time to be making some plans around the possible outcomes from what may be a turning point for Brexit, and sterling exchange rates.
Brexit has been the main driver for sterling exchange rates since before the EU vote back in 2016, but today sees many key releases to move the market, it may be useful to be aware of other economic news.
Firstly, the all-important German GDP (Gross Domestic Product) data at 08.00 this morning has shown the Eurozone’s leading economy avoiding a technical recession, with 0.1% growth for the quarter. 0.1% is not anything to be overly optimistic about however and concerns may remain ahead on the subject of European growth.
For the UK, we have UK Retail Sales at 09.30 and then Eurozone GDP at 10 am will be of more interest following the German news this morning.
For clients interested in the Australian dollar, the early hours have seen Australian Unemployment which has seen some weakness on the Aussie dollar so far. Unemployment fell from 5.2% to 5.3% as expected, taking the Aussie 0.5% lower against the pound to 1.8876 on the interbank rate.
Not to be outdone by political events in the UK and Europe, the House impeachment enquiry on Ukraine began in the United States yesterday, with the potential for it to escalate to the point where Donald Trump would be formally impeached and potentially removed from office.
The focus surrounds a phone call to Ukraine Trump is alleged to have had, threatening to withhold military aid on condition of an investigation into political rivals by Ukraine. Any developments here may be a factor on US dollar exchange rates, as the market debates the likely effects of the outcomes.
Trump has also been in the headlines with threats to escalate the trade wars with China ‘substantially’, if no agreement can be found by December.
Such news has the potential to influence the Australian dollar, owing to the Australian currency’s correlation to sentiments on global trade.
The US dollar was also fractionally stronger as Jerome Powell, US Federal Reserve Chairman indicated he didn’t feel a December rate cut was likely.
If you have any currency transfers planned, please don’t hesitate to speak to our team about all the latest news ahead regarding the rates and the market.
I switched to Foreign Currency Direct earlier this year, and I can honestly say they have been absolutely marvellous. Registering your client could not be easier, the Portal allows you instantly access your clients giving us full transparency, and my dedicated Account Manager Amelia does a fantastic job of keeping me informed.
Rob Harold is a pleasure to work with, he has an outstanding conversion rate from leads I put forward and provides those clients with an excellent service. By always keeping me informed at every stage, this helps me keep my sales on track at the vital time when payments are due.
I use Foreign Currency Direct for my own currency transfers and I recommend their services to our clients for currency exchange on Spanish property for purchases and sales through Costa Blanca Casas.
Always the best rate for me and my clients. As we have many clients at Girasol Homes we get 5 star service for them, and we expect it as well, always a personal and bright service. Highly recommended.