As time runs out for UK and EU leaders to come to an agreement for the trading conditions post-Brexit, the talk of a no-deal Brexit is ramping up which is weakening the Pound. The Sterling report below looks into the muted impact of the positive economic outlook for the UK. The table below shows the range of exchange rates throughout the past year and the difference in return you could have achieved when selling £200,000.00 during the high and low points.

Currency Pair% ChangeDifference on £200,000
GBPEUR2.74%€6104.17
GBPUSD0.73%$1885.74
GBPZAR9.17%ZAR 336,905

The once unthinkable situation is now a reality, and since Dr Liam Fox (Secretary of State) announced earlier in the month that there is a 60% chance of a no-deal outcome, the Pound has gradually softened down to its lowest levels of 2018.

Despite a very quiet week for economic data releases out of the UK, there is the potential for a market move should Dominic Raab (Brexit Secretary) or his EU counterpart, Michael Barnier announce any major updates regarding Brexit this week.

At the time of writing financial markets aren’t hopeful of an agreement taking place until November, which is beyond the October target covered many times within our market reports. Those of our clients with large transfers involving the converting of Pounds into other currencies should be weary of this schedule, as if the conversion needs to take place before November it may be that Brexit has put further pressure on Sterling. Especially as November is already an extension from the previous target of October.

Positivity surrounding the UK economy fails to result in Sterling strength

Positivity surrounding the UK economy fails to result in Sterling strength

On Tuesday the UK reported its biggest Governmental spending surplus for July since the year 2000, as the ONS (Office for National Statistics) released impressive public sector net borrowing costs. There was a surplus for July of £2bn, meaning the UK Government spent a lot less than it received during the month. This figure was almost double what analysts expected, and resulted in a boost to Sterling’s value that unfortunately was reversed during yesterday’s session. Keeping in contact with your broker will allow you to capitalise on gains such as Tuesday’s, which is especially important in the current climate.

 

It has also emerged this week that London has extended its lead as the ‘King of Currencies’ despite Brexit uncertainties. Despite the warnings from stanch Remainers in the lead up to vote, London has actually extended its position as leader of the currency trading business in the 2-years since the vote. Whilst this news is unlikely to boost Sterling immediately, it’s a positive sign for UK plc moving forward.

Later today a Brexit ‘no deal’ impact paper will be released. There are around 20 of these no-deal papers set for release which will cover the UK governments contingency plans in the event of a no-deal, but today’s is significant because it will cover the financial services according to the Guardian. This wasn’t expected, and because it will cover such a key area of the UK economy I think there could be scope for market movement, so it’s worth being aware of this.

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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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.