Sterling has continued to remain under pressure even though we have seen a few bits of positive news from the British economy this month. We have seen inflation rising which would typically lead to Sterling improving, as to combat rising inflation a Central Bank would look to raise interest rates. More on the reasoning behind the muted impact of positive data in the market report below; the table shows the range of a number of exchange rates for the past 30 days.
|Currency Pair||% Change||Difference on £200,000|
Clearly the Bank of England is more concerned with what will happen over the next few months as the negotiations continue. We also saw an improvement in Retail Sales at the end of last week but again this did little to boost the Pound against a number of different currencies.
On Friday afternoon Prime Minister Theresa May confirmed in a speech that she will not change her tack even though her Chequers plan has so far been rejected by EU leaders. The Pound fell quickly against a number of different currencies during the statement as Theresa May demanded that the EU must offer new proposals if the Chequers plan will not be accepted.
Theresa May went on to say that the EU must treat the UK with respect during the discussions after the rejection of the Chequers deal with no other alternative provided. She went on to say that ‘I will not overturn the result of the referendum nor will I break up my country.’
With this particular speech this means that under her leadership there will be no second referendum.
The Prime Minister went on to say that ‘I have treated the EU with nothing but respect. The UK expects the same, a good relationship at the end of this process depends on it.’ She also continued by saying until we know what the EU will propose ‘we cannot make any progress.’
This additional uncertainty surrounding Brexit is likely to weigh heavily on Sterling going into this week, so if you’re planning a foreign currency transfer it may be worth getting this organised in the short term. Indeed, in the last week Sterling has fallen by 2 cents vs the Euro or the difference of £4,700 on a currency transfer of €200,000.
Brexit Secretary Dominic Raab also showed his displeasure at their treatment in Salzburg at the end of last week and said that the EU leaders have ‘yanked the handbrake’ on the Chequers deal. He also went on to say that the EU leaders have not offered any ‘credible alternative’ and said that he does not know how seriously EU leaders are taking the negotiations.
Over the weekend Labour leader Jeremy Corbyn has suggested that Labour would be prepared to back another EU referendum if the members want one. Meanwhile it was reported over the weekend that Theresa May’s aides have been planning for a potential snap election in November in order to save the Brexit talks from failing after EU leaders rejected the Chequers plan last week.
With so much political uncertainty at the moment I think we could see the Pound face a very difficult week ahead, so make sure you’re well prepared if you’re sending money overseas in the weeks ahead.
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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