Getting the best exchange rate can be achieved by understanding what is driving rates and the service of a specialist currency broker. Below are movements in just a month affecting Pound Sterling rates when buying £200,000 during trading on Wednesday:
|Currency Pair||% Change||Difference on £200,000|
Phase 1 of Brexit negotiations were concluded successfully in December, however the signs are that the next round of Brexit talks, which include the future trading between the UK and the EU, could be problematic. Negative headlines around trade discussions are likely to be detrimental to the Pound. And it appears, following the EU Commission’s warning to UK-registered businesses that Brussels are making contingency plans for a no deal scenario. Brexit negotiations will begin again towards the end of January and are thought to cover transitional arrangements after the UK leaves the EU and future economic and security collaboration.
In my opinion agreeing a deal successfully before the current deadline seems optimistic and I believe an extension may be needed.
Theresa May has said it is right to plan for all possible outcomes, including no deal, however she is confident that a positive deal for future UK/EU relations can be agreed.
Following the EU Commission’s memo on the future of UK-registered businesses in the EU, David Davis has written a letter to Theresa May warning that firms may have to relocate to Europe in order to maintain current trading conditions if no deal is agreed.
There seems to be a concern from Mr Davis that Brussels' Brexit preparations are "frequently damaging to UK interests". He has warned that the EU's stance amounts to "potential breaches of the UK's rights as a member state", and that he wants the European Commission to withdraw their statements.
The current situation, even before talks have started doesn’t bode well for Sterling exchange rates and indicates that there could a bumpy road ahead. If you are looking to buy Euros with Sterling it may be wise to consider making your exchange sooner rather than later.
Today will see the release of the credit conditions survey from the Bank of England (BoE). As part of the BoE’s plan to maintain monetary stability and financial stability. It is beneficial to understand developments and trends in credit conditions. The survey covers secured and unsecured lending to households and small business. This should be looked at and compared with average wage growth, to see if borrowing at current levels is sustainable. This will be an interesting insight into the health of the UK economy and could move markets.
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