The pound experienced a slight recovery during yesterday’s trading, following a steep drop last week against most major currencies.
Reports suggested that Tory MP’s had rejected UK Prime Minister Theresa May’s draft withdrawal agreement with the EU, which saw Sterling drop around 3 cents against the Euro and 2 cents against the US Dollar, bringing the pairings to much more familiar levels.
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Despite the domestic negativity that the PM has faced, May has since confirmed her intentions to continue in her post and see the Brexit process through to completion, whilst providing optimism that a deal can still be agreed with her European counterparts.
Yesterday morning, the president of the European Council, Donald Tusk announced via Twitter that the EU commission had informed him, that a draft agreement had been agreed at a negotiator’s level and agreed in principle at a political level, but was still subject to the endorsement of its leaders.
This news saw the GBP instantly recover, pushing the GBP/EUR paring towards the upper 1.12s and bringing the GBP/USD paring back above 1.28, highlighting how volatile the market currently is and how crucial the timing of transfers can be, to prevent losses.
Despite reports of a breakthrough yesterday, there is still a long road ahead and uncertainty looms over Sterling markets.
The draft must still be approved by the leaders of the individual EU states at an emergency summit in Brussels on Sunday and then the Prime Minister will face further challenges getting the agreement through her own Parliament, where many members feel the agreement doesn’t go far enough to break ties and fulfil the intention of the Brexit vote.
Further complications have arisen this week, providing concern of short-term market volatility, as the Spanish Government has threatened to veto any agreement, unless they receive assurances surrounding future negotiations over Gibraltar.
There is without a doubt the potential for major Sterling movement in the short term and with Brexit such a key driver of currency markets, clients with an upcoming transfer can manage their exposure by contract options such as a limit order or stop loss.
For more information, please contact your account manager here or contact our trading floor directly on 01494 725 353.
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