Brexit is currently the key factor in the pound's value and unfortunately the current situation does not bode well for sterling. Theresa May has set January 15th to be the date of the vote on her current deal by Parliament.
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The vote was originally postponed following politicians being openly vocal that they would not vote the deal through. May, knowing that the deal would not pass delayed the vote until mid-January hoping to get a better deal from Brussels in the meantime.
Unfortunately, President of the European Commission, Jean-Claude Junker has stone walled May, stating there will be no concessions and they would only be willing to clarify current terms.
He has also said there will be no extension to the current Brexit deadline unless there is a second referendum.
If the deal is still essentially the same deal as before I think there is little chance of the deal being passed. There is no doubt May will be rallying for support, but it may be the case that she knows the vote will fail and then will return to Brussels with the threat of a no deal scenario. The DUP have already made it known they do not support the current deal.
It has been recently shown in the media that there has been preparations put in place should a no deal situation occur. For example, the vast number of lorries to be used in Kent to test Government plans to cope with a no deal to try and convince Brussels we are ready for this outcome.
May’s position is not a strong one after the Government lost the vote on a finance bill. This means May’s budget on Brexit preparations will be substantially less.
It will be interesting to see if Junker will go back on his word.
The majority of outcomes to the vote are sterling negative. If you are selling Sterling short term it may be wise to take advantage of current levels.
Tomorrow we will see the release of UK GDP. This can cause volatility on the markets and is worth keeping an eye on. There is expected to be little change away from last month’s 0.1%, however if data arrives away from expectations we could see movement in sterling value
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