Joseph Wright
Senior Executive Dealer
Customs Union the key talking point this week
Sterling has strengthened following the agreement of a Brexit transition deal between the UK and EU as the UK leave the trade union.
Sterling suffered last week following Dovish comments from Mark Carney when he failed to confirm a further interest rate hike at the next BoE meeting. The Pound could well fall in value if there is no interest rate hike at the next opportunity.
| Currency Pair | % Change | Difference on £200,000 | |
|---|---|---|---|
 GBP |  EUR | -1.16% | €2649.21 |
| GBP |  USD | -2.40% | $6699.58 |
| GBP |  AUD | -0.60% | CAD 2150.56 |
No. 10 confirms that the UK will leave the EU’s Customs Union
As the Brexit negotiations continue there is a one issue surfacing that appears to be a major sticking point, and personally I think how the issue unfolds will determine the Pound's value as the year goes on.
A term our readers are likely to hear about over the next week or so if they haven’t already is Customs Union. It’s when a group of countries agree to apply the same taxes on imports/goods from outside the union. This allows goods to move tariff-free between the countries involved and it also means that when goods have cleared customs in one of the union member countries, these goods can then be shipped to others without further tariffs being imposed.
The current UK Prime Minister, Theresa May has rebounded from her low point last year when she lost the snap election she called. Since then May has agreed the Brexit Bill at a reduced price than first anticipated, and her chief Brexit negotiators have since agreed the terms of the transitional deal involving the UK and EU as the UK exits the European Union. Sterling has climbed owing to these breakthroughs, but I think it could come under pressure if this issue surrounding the Customs Union continues, especially as it involves the yet to be agreed upon position of the Northern Irish border.
Last Wednesday the government suffered defeat on the EU Withdrawal Bill. There are members in the House of Lords that wish for the UK to remain in the EU’s Customs Union, with some of these MP’s being in Theresa May’s Conservative Party.
As a result the matter will be debated again by MP’s this Thursday, and although the result of any further votes aren’t legally binding I think the talks will carry enough weight to move Sterling’s value. Especially after last Wednesdays vote and a number of key Downing Street sources since suggesting that the UK ‘will not be staying in the customs union or joining any customs unions’.
A number of Brexiteers over the weekend such as Sajid Javid and Michael Gove have threatened a revolt if May makes a U-turn on her promise to leave the EU’s Customs Union post-Brexit.
With the talks being this Thursday, readers have plenty of time to get in touch and plan around the customs union debate, so do make your broker aware if you’re planning a transfer involving the Pound.
Are four rate-hikes from the Bank of England by 2020 realistic?
A well-known forecasting body, the EY Item Club have recently predicted that despite a sluggish economy, the Bank of England is still likely to hike interest rates twice this year.
They believe that improving jobs markets figures along with earnings growth picking up is likely to prompt the BoE to make these bullish price hikes, and they even went a step further and predicted another two interest rate hikes next year.
Sterling softened in the middle of last week when BoE governor failed to confirm next months anticipated rate hike, and if there is one next month or at the BoE’s next opportunity the base rate will hit 0.75%, the highest it’s been since the UK exited the recession of almost 10-years ago. I would expect to see the Pound drop should there be no rate hike on the 10th of May.
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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D. Riley
UK
Straightforward, efficient and pleasant to deal with. Have used them before and will do again. Joseph is always efficient and pleasant to deal with. The transactions are very straightforward.
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UK
Very efficient, reliable and professional service. Joseph Wright couldn’t be more helpful. Excellent company – no reservations about them.
T. Dillon
Joseph Wright has been an excellent account manager. Joseph is very knowledgeable on events happening in the markets and kept me well informed on my transactions.
J. Livingstone-Blevins
France
Joe Wright was efficient and very clear in explaining and effecting the transaction. He was also empathetic and never irritated by all the questions I insisted on asking. He certainly inspired confidence in your product and I will have no hesitation in recommending your services.