The Pound is on track to become one of the world’s best performing currencies in November having been outperformed last month by such tropical staples as the Seychelles rupee. Financial markets suspect a hard Brexit is looking less likely and whilst we still don’t know exactly what Brexit means, markets are acting on available clues. Recently a number of reports suggest the UK will be retaining some form of single market membership. Mark Carney has apparently been working behind the scenes with banks for some form of ‘Brexit buffer’ deal to protect the UK from any sharp shocks once it leaves the EU. Last week at a CBI (Confederation British Industry) conference Theresa May hinted at some form of deal retaining access to the single market.
The legal challenge to the government’s power to trigger Article 50 is also working its way through the court system with a roughly 75% chance of victory according to sources. Access to the single market is seen as a crucial component of any Brexit deals since it means the UK can still trade freely with the EU and avoid any sharp economic shock, hence the recent buoyancy of Sterling. Important economic data to watch tomorrow is Mortgage Approvals and Consumer Credit data showing how much consumers borrowed in October. Wednesday is a Bank of England Financial Stability report but with no changes in policy expected this should have little impact. Thursday sees the beginning of a new month with important Manufacturing data at 09.30 and Construction on Friday. I suspect Sterling will remain loosely supported at these levels for now.
During last week’s Autumn Statement The OBR (Office of Budget Responsibility) predicted government borrowing to be £122bn more over the next 5 years which according to a think-tank the Resolution Foundation means average earnings will be £830 per person per year worse by 2020.The Office for National Statistics has predicted inflation at 4% in 2017 and the OBR (Office of Budget Responsibility) slashed growth forecasts moving forward. This means people will be earning less and having to pay higher prices, not good news for an economy.
If you are buying a foreign currency with the Pound you have been gifted a great opportunity with the recent improvements that have seen Sterling rise across the board almost 8%. If you are sending money overseas to buy a property or paying business invoices your purchase has become between 5 and 8% less costly since October. A 250,000 Euros purchase this morning costs £16,500 less than the lower points in October. There are never any guarantees on exchange rates but with many challenges still ahead for the UK and the Pound I think this represents a good time to buy.
If you are buying a foreign currency in the near future and would like to know more on how Brexit-related events could impact your buying or selling requirement, speak to one of our brokers on 01494 725 353 or email me here for more information.
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