The pound has remained range-bound between 1.11 and 1.115 against the euro since the start of the week, with no UK economic data releases and little in the way of Brexit updates to help sterling to move outside of this key resistance point.
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However it was reported yesterday that Theresa May’s cabinet is looking to step up preparations in the event of a no deal Brexit, and is requesting that her ministers vote on three eventualities for how preparations should continue, details of which are being kept behind closed doors.
However markets took some confidence from a statement from Jacob Rees-Mogg who has recently attempted to oust May by submitting a vote of no confidence, who said that ‘under the Fixed-Term Parliaments Act I will always support the Conservative Government; I will not vote a Conservative Government out of office’. However he did go on to add that May’s position is under more risk from pro EU ministers than Eurosceptics, in the event of a no confidence motion within the Government.
Theresa May has however confirmed that MPs will be given the opportunity to vote on the deal in the third week in January, but with just under a month until this vote, contingency plans should be made in the event that an agreement cannot be reached.
It is worth noting that it was only last month that Mark Carney, Governor of the Bank of England, warned that the event of a no deal Brexit could see sterling’s value plummet by 25%. As we head towards the final few months of Brexit negotiations, it would be worth putting a plan in place for any upcoming currency transfers involving the pound, so that we can help you to avoid any potential significant losses.
After a reasonably quiet week for UK economic data, we will see a flurry of releases this morning which could help sterling break through the resistance point mentioned earlier. Retail Price Index measures the average price of goods and services purchased by consumers, and is expected to remain the same in November as previous months. However Inflation data in the form of Consumer Price Index is predicted to improve slightly from 0.1% to 0.2% month on month. Inflation is one of the factors taken into account by the Bank of England when deciding future Interest Rate policy changes, so this will be keenly watched for as the next Interest Rate decision will be announced on Thursday.
Although no change to the current rate of 0.75% is expected at this meeting given the current fragile economic climate, any further hints from the Bank of England could heavily impact the value of Sterling towards the end of the week.
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