This Sterling update discusses today's House of Commons debate of the "Great Repeal Bill", along with the impact of the UK's Brexit strategy on the Pound. The table below shows the market movements for a number of GBP currency pairings yesterday:
|Currency Pair||% Change||Difference on £200,000|
Today will see the House of Commons debate the terms of the “Great Repeal Bill” which will effectively be the mechanism for bringing European law into British law once Brexit takes place. All legislation will be copied into domestic UK law to avoid any legal cliff edge scenarios and then laws can be amended in the future as required. The bill is topical not just for the sheer size of it but also considering UK Prime Minister Theresa May recently lost her majority in the House of Commons and now requires the help of the Democratic Unionist Party (DUP) to push ahead. Labour will try to vote down the bill and so it would only take six Conservative party members to vote against it which could create even more uncertainty at a time when the markets are desperately seeking clarity over Brexit.
This could be damaging for the Pound at a time when the Brexit negotiations have almost hit stalemate as the thorny issue of a divorce settlement continues to hold back any future trade deal discussion. Even the leaked UK Government document this week about limiting migration has resulted in the EU stating they will block any transitional deal if Britain limits low paid labour from the EU.
In my opinion there is a real chance that the British negotiating team may end up having to walk away from the negotiation at some point if things go badly. This scenario could have a very detrimental effect on the Pound as one would expect in the short term, considering the uncertainty that would go with such a move, let alone the global media coverage. If there is no headway or “sufficient progress” in the Brexit negotiations then the British may have to reluctantly adopt the above strategy.
This is a probable situation and those clients hoping for better rates should consider their options to avoid disappointment should the worst happen.
An important speech from Theresa May is expected to be given sometime after 21st September which should centre on Brexit and is likely to be crucial for the Pound. This will be the most important speech since the Lancaster House speech was given in January when the Government’s general stance on Brexit was given. To recap, there was considerable market volatility at this time and the Pound actually rocketed almost 2% immediately after that speech was given.
Clients looking to move funds would be wise to consider their options at this stage as there could be even more volatility in two weeks’ time as more detail on Brexit is potentially offered.
For more information on how future data releases could affect your currency transfer you can reach our currency brokers on 01494 725 353 or email me directly at firstname.lastname@example.org.
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