The pound interbank rate rose to a 9 month high against the US dollar, and close to the highest point against the euro since May 2017 yesterday, after news that the UK Parliament voted against a No Deal Brexit on Wednesday evening.
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MP’s then voted once again yesterday evening on a number of amendments. The first was for the possibility of holding a second referendum, which lost by a clear majority. The second vote was an amendment which would allow MP’s to take control of negotiations, which lost by only 2 votes. Lastly, a vote on a motion to extend Article 50 passed with a majority of 211 votes: 413 in favour of extending the departure date versus 202 against.
However, this vote is non-binding, and the UK’s departure from the EU could still take place without a deal on 29th March. Theresa May will now seek authorisation from the EU to extend Article 50 until 30th June 2019, so long as MP’s vote for May’s deal by Wednesday. If the EU agrees to this, the UK will not leave the EU on 29th March. However, if May’s deal is not agreed to by Wednesday, a much longer extension may be required, which would require the UK’s participation in the European Elections.
GBPEUR interbank exchange rates remained around 1.17 for most of the night, although markets have opened this morning in the high 1.16’s. This suggests that the news of a potential short extension had been taken reasonably positively by investors, in order to give the Government more time to plan for the UK’s departure, and avoiding a No Deal scenario come the 29th March deadline.
However the UK isn’t out of the wars yet and much can change over the course of the week ahead. Clients with a currency transfer to make involving the pound should keep a close eye on developments, and keeping in close contact with their Account Manager here can enable us to alert you of any spikes in your favour.
Asides from Brexit, the next major release which is expected to cause volatility on GBP exchange rates is the Bank of England’s (BoE) Interest Rate decision meeting on Thursday, where it is widely expected that rates will remain on hold at 0.75%, especially considering the current uncertain climate. However the minutes released afterwards has the potential to be the main driver for sterling exchange rates, so please feel free to get in touch ahead of this release to find out how you can protect yourself from adverse market movements.
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