Following the recent update in Brexit talks, with Theresa May taking heed of David Davis' request for a date for when the UK will exit the customs union. The confirmation that this would take place by December 2021 caused the Pound to quickly fall in value. The Sterling report below looks into the reasons for this and the upcoming data releases that will continue to impact Sterling exchange rates. The table below shows the difference in GBP you could have achieved when buying £200,000.00 at the high and low points of the past month.

Currency Pair% ChangeDifference on £200,000
GBP/EUR0.5%€1137.08
GBP/USD-1.1%$2955.19
GBP/CAD2.6%CAD$9159.44

Brexit related politics remain the biggest driver of Sterling value

Now that an interest rate hike from the UK isn’t expected until later in the year, I expect Brexit negotiations and rumours to once again become the biggest driver of GBP exchange rates.

Yesterday this was certainly the case, as Sterling dropped across the board of major currency pairs owing to the most recent Brexit update. UK PM, Theresa May yesterday gave in to the demands from Brexit secretary David Davis regarding the customs union and the Northern Irish border. The uncertainty surrounding this matter and the disagreements within the Conservative party has put pressure on May, and there has been talk of a revolt behind closed doors (spearheaded by Hard-Brexit leaning Jacob Rees-Mogg) and rumours that David Davis was prepared to step down.

David Davis had demanded an official end-date to the UK’s participation on the EU’s customs union, whereas some were hoping for an open-ending agreement with no deadline, as were the markets.

Once it became official that the UK will leave in December 2021, the Pound immediately fell. This is being referred to as a time-limited backstop and it’s to be put in place if there is a delay to the implementation of a Brexit deal by the current deadline of March 2019.

I think that those with a Pound related currently exchange should pay close attention to Brexit updates. It’s difficult to know when to expect them, which makes keeping in touch with your broker here at FCD all the more important.

Key events to look out for next week, both economic and political

Although there is a quiet end to the week for UK data, I think there could be a lot of movement for GBP pairs next week due to the volume of updates expected.

British lawmakers will spend 2-days discussing the Brexit bill next week, and the amendments proposed by the upper houses of parliament recently to the bill that will end the UK’s membership of the EU. It must be approved well before March the 29th next year, so I expect this update to hold to potential to move markets due to time running out.

economic and politial events to look out for next week

Key events to look out for next week, both economic and political

Although there is a quiet end to the week for UK data, I think there could be a lot of movement for GBP pairs next week due to the volume of updates expected.

British lawmakers will spend 2-days discussing the Brexit bill next week, and the amendments proposed by the upper houses of parliament recently to the bill that will end the UK’s membership of the EU.

It must be approved well before March the 29th next year, so I expect this update to hold to potential to move markets due to time running out.

Monday will be a busy day in terms of data, with Industrial Production and GDP figures amongst others released at 9.30am. Tuesday morning see’s the release to earnings and unemployment data. Wednesday will see the release of Inflation data and then on Thursday there will be Retail Sales data at the same time. Do make us aware if you would like to be updated if there’s movement for GBP exchange rates.

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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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.