Sterling fell to a near two year low against the euro as the interbank rate fell into the 1.08’s for the first time since 2017. Since Boris Johnson has come into power and re-emphasised his plan to pursue a No Deal Brexit sterling has lost nearly 3% against the euro.
|Currency Pair||% Change (Month)||Difference on £200,000|
In the immediate days after Boris was appointed Prime Minister sterling seemed to enjoy a boost, however after both Johnson and Michael Gove ramped up expectations for a No Deal, the prospect of that outcome on the 31st October now seems very real.
Some analysts are suggesting that the Prime Minister is posturing to force the European Union to re-negotiate the existing withdrawal agreement, which they’re adamant that they won’t. Alternatively, the PM might be waiting for Parliament to block a No-Deal which would potentially trigger a General election, which Boris would hope may allow him to gain a bigger majority and a mandate from the people. Considering the Parliamentary recess is underway it may be wise for MP’s to at least keep themselves on standby.
Much like against the euro, sterling fell to a 26 month low against the US dollar.. The US economy has been strong this year and the uncertainty surrounding Brexit has really started to take its toll.
An analyst at ING Bank has suggested there is more downside expected for sterling with ING forecasting the GBP/EUR around 1.05 and GBP/USD moving to 1.18. It is worth noting that both of these forecasts have considerable upside in the forecast should there be a sudden positive development on Brexit.
Tomorrow afternoon the Bank of England will also provide an interest rate decision. There isn’t expected to be any changes in the rate, however Governor Mark Carney will deliver a statement and answer questions after the decision. Carney is notorious for weakening sterling if you look back through to previous statements, you may wish to contact your broker before the event takes place.
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