This Pound Sterling article will discuss factors that could affect GBP exchange rates over the coming days if you are buying abroad or making a currency transfer. The table here shows the market movements for a number of currency pairings in the last 30 days:

Currency Pair% ChangeDifference on £200,000
GBPEUR3.16%€7,020
GBPUSD2.16%$5,660
GBPCAD2.36%CAD $7,860
What are the repercussions of a potential no-deal scenario for the Pound?

What you need to know about Brexit

For clients that are involved in either buying or selling the Pound, Brexit negotiations continue to drive exchange rates and the next 30 days could determine whether a recovery throughout 2018 for the Pound is on the cards or whether further falls are expected.

At the moment Sterling exchange rates are approximately 15% down against most major currencies compared to pre-Brexit levels. This is fantastic news for clients repatriating a foreign currency into Pounds but bad news for foreign currency buyers.

Reports in recent weeks have emerged and it appears that UK Prime Minister Theresa May and Brexit supporters from her cabinet, believe the UK should offer more than the €20bn that has been offered so far and actually that figure could double in the upcoming weeks.

With the EU commission meeting on the 14th and 15th December to decide whether to allow talks on future trade agreements, the UK need to be clear with the EU about what they are prepared to offer in regards to the divorce bill but also EU citizens’ rights.

UK Prime Minister Theresa May in recent weeks has eluded to a deal being close however a sticking point still could be the Irish border.

Last week Irish Republic’s EU commissioner exclaimed that Dublin if required, will veto Brexit trade talks if there is a hard border in Ireland. Since the announcement the UK’s international trade secretary has stated that the whole of the UK will be leaving the customs union and single market and the future of the Irish Border cannot be decided until a trade deal is reached between the UK and the EU. However the problem the UK face is that the EU have made it clear trade discussion will not begin until the Irish border is sorted.

Personally I am optimistic that the Pound is going to recover throughout 2018. Over the last 6 months it’s clear to see that the UK and EU want to come to an agreement. For example 6 months ago the UK weren’t prepared to pay a penny to leave the EU (Boris Johnsons words) and the EU were stating the UK would have to pay €100bn. As I have stated above reports are suggesting that €40bn could be the number that both parties are going to agree on, which means the UK would be one step closer to discussing trade.

For clients that are selling Euros to buy Sterling in the upcoming months on a €200,000 transfer you are receiving an additional £25,000 compared to Pre Brexit levels. The safe option is to take advantage of the ‘Brexit discount’ and not gamble on a market that is full of surprises.

Bank of England's main concerns is that consumers will be able to keep up their spending

Stress tests and Mark Carney’s speech

This morning the Bank of England are set to publish the latest Bank stress tests for the seven major banks. The Royal Bank of Scotland will face the most amount of pressure as they failed the stress tests a year ago and Chancellor Philip Hammond also announced recently that the government plan to sell their majority stake in the bank. Since the financial crisis in 2007 the stress tests have been put in place to prove that banks have a balance sheet to withstand another economic crisis.

Shortly after the tests Governor of the Bank of England Mark Carney will give a speech to outline the findings. Regular readers will be aware that Mr Carney speeches can create volatility for exchange rates.

Results dependant, as long as all of the banks have met the criteria, this morning could create buying opportunities for clients involved with Sterling.

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.

News

Read more articles
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.