The pound fell against its major currency pairings including the US dollar and euro yesterday afternoon after Labour Leader Jeremy Corbyn warned of the ‘very real danger’ of a no deal Brexit, following the announcement of Theresa May’s resignation last week. GBP/USD Interbank exchange rates fell to the lowest levels in almost 5 months, reaching the 1.25s.

Currency Pair% Change (Month)Difference on £200,000
GBPEUR4.1%€9,380
GBPUSD4.6%$11,700
GBPCAD4.8%CAD $16,200
car production in April fell by 44.5%

No Deal Brexit impact

Chancellor Philip Hammond also followed along similar lines to Corbyn yesterday, stating that a no deal Brexit would seriously damage the UK economy, whilst urging Conservative candidates battling for pole position to tone down their exaggerated spending promises. Hammond went on to suggest that he would be prepared to vote against his Government if he felt it was headed towards a no deal Brexit.

Economic data released yesterday demonstrated the weight that Brexit is already having on the UK economy, as the Society of Motor Manufacturers and Traders (SMMT) announced that car production in April fell by 44.5%; its steepest fall in 10 years, when the UK was in its recession.

Many car manufacturing plants closed down last month in order to avoid the disruption expected from the UK leaving the EU on 29th March, and when the news broke that this date had been extended to 31st October, it was already too late to change carmakers plans.

How will the next Prime Minister be chosen?

After Theresa May announced her resignation as Prime Minister and Conservative Party leader last week, which takes effect on 7th June, this next month is likely to provide further volatility for sterling exchange rates, as any political uncertainty has the capacity to create swings for the currency in question.

There are eleven candidates from the Conservative Party who will be battling to replace May as Prime Minister, although May has said she would continue to serve as PM until the process had been concluded. The timeline for the process is expected as follows:

  • 4th June – 1922 committee will meet to agree the plan for the leadership contest.
  • Week commencing 10th June – Any candidates running for leadership must be nominated by 2 other members of the Conservative Party. Nominations expected to close by 14th June.
  • By the end of June – Several rounds of secret ballot votes will take place to reduce the number of candidates, and the candidates with the fewest votes will be eliminated. Previously this has continued until only 2 candidates remain, and votes have been held on Tuesdays and Thursdays.
  • Before Parliament’s Summer break – Final candidates will go into a postal ballot voted for by the wider Conservative Party (there are around 160,000 members). The winner should be announced by late July when Parliament usually begins its Summer recess.

Any clients with an upcoming currency exchange requirement involving the pound can contact us today to set a rate alert, so that we can alert you if your desired rate becomes available.

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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.