Staying true to form, 2018's final weekend brought with it a fresh batch of uncertainty for the Pound and highlighted the extreme paths that potentially lie ahead for the UK in 2019.
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The reality of a no deal Brexit hit the headlines as preparations along the Channel seem to be taking form, with the Government already lining up over a £100 Million investment in creating new Ferry lines across the south coast in a bid to limit traffic build ups in major ports as a result of the inevitable increase in delays from customs checks.
The Government has handed 2 major contracts to the well-known French multinational Brittany Ferries and Danish Shipping Firm DFDS to ease the pressure, as well as reaching a smaller £14 Million agreement with UK based Sea Bourne.
The move with the latter in particular has drawn a fair amount of criticism given Sea Bourne are yet to run a ferry service having until this point mainly specialised in Freight shipping only.
It will be interesting to see how May's Cabinet reacts this week. Evidently, when faced with the ever-growing prospect of a no-deal Brexit, the Government seems to be forced into what could be argued as rash, poorly researched and very costly decisions to ease the break and slowdown in trade.
Investors may well be holding out for breaks of news like this to further justify the general feeling of a lack of preparation for a No-deal scenario which remains the market's worst fear for now. It is hard to see at this point, just how the Pound is going to gain any kind of traction in the short term.
Similar news in the build up to the vote on May's deal on the 14th of January will likely carry more weight and will have real potential to bring added volatility to Pound's value.
Interestingly, trade minister Liam Fox said in a statement there is still a 50/50 chance Brexit could be stopped altogether, which just highlights the lack of clarity surrounding the pound going into the new year. To go over the scenarios that this might hold for sterling, feel free to get in touch with our trading floor on +44 (0)1494 725353.
Wednesday's Markit PMI data might prove to be the first release of the year to truly test the Pound. A gradual decline in business confidence in the UK has been fairly well documented throughout the final quarter of the year.
I wouldn't be surprised to see this filter through in this week’s release which would leave the pound on the back foot and potentially lead to foreign currency to start the year more expensive than it finished it. Those with an immediate foreign currency requirement may want to consider their options.
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