Last week saw a sharp sell off for sterling currency markets, which saw the interbank rate slip to 3-month lows against the EUR and USD.
|Currency Pair||% Change (Month)||Difference on £200,000|
Mid-market levels for the GBP/EUR pairing are now fluctuating below 1.14, having lost almost 4 cents since the start of the month, and GBP/USD have dropped below 1.28, which has seemingly been a key support level over the course of the last year.
Markets reacted to failed negotiations between Prime Minister Theresa May and Labour Party Leader Jeremy Corbyn, that had intended to identify a common ground for the direction of the Brexit process, despite frictions surrounding a customs union and a further referendum.
It’s been widely reported that the Prime Minister has refused to meet Labour’s demands for a permanent customs union post Brexit, a policy which has seen contempt by Eurosceptics in her cabinet and many of her fellow party MPs.
Theresa May has now turned focus to her withdrawal agreement and according to the Financial Times, the PM has promised to set out a “new and improved” proposal, in an attempt to build cross party-support and successfully push her deal through on its fourth attempt in parliament. The PM hopes that her new proposal will be considered with a fresh perspective and will aim to gain support from resistant Labour MPs, with many reports suggesting that the new deal will include proposals to uphold EU standards for workers’ rights and environmental protection.
However, it is expected that the newly proposed deal will not include an option for a second referendum, which has typically been a condition for opposition party members as a price of their support.
It is currently scheduled that Parliament will vote on the new deal on 3rd June and it has been regarded that this could be May’s final attempt to get the bill through and her final throw of the dice, as its been widely reported that her days are numbered as PM, as confidence in her leadership has been diminishing.
If the PM fails to push her vote through and the bill is not passed, the default position will see the UK exit from the EU on October 31st without a deal. In the 3 previous votes, Parliament has seen a rejection of her proposed deal by 230, 149 and 58 votes.
Since sterling sentiment has been largely influenced by Brexit developments, the build up to the vote could see movement for the currency’s major pairings, so clients planning a transfer involving the GBP can keep up to date with the latest information by contacting their account manager here at Foreign Currency Direct.
Aside from the political developments that could have an impact on GBP, there will be key data releases this week published by the Bank of England (BoE), that could influence market movement.
Retail Price Index data on Wednesday is currently expected to show signs of improvement, however initial indications are suggesting that the Retail Sales data is to be released on Friday with the figures potentially being weaker than previous.
Investors will also be closely considering the inflation report hearing from the Central Bank this week and inflation data published on Wednesday, which is currently expected to show an increase of 0.3% for the Consumer Price Index in the last year and 0.5% from last month.
These are data releases that often influence sterling currency markets and for more information, you can speak directly with one of our dealers on 01494 725 353.
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