Sterling has made some minor gains against the Euro this week, with reports at the end of last week suggesting that both the EU and UK were softening their stances on getting closer to agreeing a Brexit deal and therefore making the chance of a no deal Brexit seemingly more unlikely.
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Michel Barnier has also announced in recent addresses that he believes a Brexit deal could be struck in the next few months. But the Pound is certainly not out of the woods yet with a volatile end to the week to come and a potential leadership challenge to PM Theresa May on the horizon.
Some of the Pound’s gains at the beginning of this week were lost yesterday after reports began to emerge that a group of 50 Tory MPs, who want a sharper and harder break from the EU, have begun to plot how and when they can force May out of Number 10.
May has faced persistent pressure and threats to her leadership since the snap election she called in June last year which surrendered the Tory party’s majority, but it seems that the pressure is now beginning to mount further and this is having a negative effect on the Pound whilst speculation persists. A confidence vote would require 48 MPs to sign a ‘letter of no confidence’. If that were to be the case it could throw the Pound in to disarray and could completely alter the course of Brexit.
Today there is a cabinet meeting held by Theresa May which will be centred on plans in the event of a no deal Brexit.
The aim is to give the public and businesses some advice on measures they can put in place to cope with the fallout from a no deal. This meeting is likely to add to the current political uncertainty surrounding the UK Government and therefore the fallout from the meeting could have an impact on the Pound.
Sterling is extremely sensitive to any political and Brexit updates at present and the slightest bit of positive, or negative, news is having an instant and knee jerk reaction on exchange rates. This could see a spike in your favour or make your transfer become more expensive, so it is important to keep in contact with your broker here who can keep you up to speed with all the latest market movements. Despite all the negative press, the Pound is still trading against the Euro and USD at some of the best levels since July.
Today is also key for Sterling with the latest Bank of England interest rate decision set to be announced this afternoon. With the political landscape so uncertain at the moment and after only just raising rates in August, it seems highly unlikely that we will see any change in policy today. Having said that, any clients with a Sterling requirement should keep a close eye on Governor Mark Carney’s comments following the announcement, especially after the recent news that he has agreed to stay on as governor until January 2020.
This added stability may well benefit the Pound going forward as Carney has worked tirelessly on Brexit planning in recent years. Should Carney hint to any further rate hikes for the remainder of his tenure then we could see some movement on Sterling rates.
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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