The Pound has been on a slight negative trend after what had been a steep drop against most currencies on Monday morning to begin the week. After heavy debating the initial discussions from the House of Lords are now yielding the floor to votes on key issues of the Bill between the peers. The key features markets are waiting to hear are whether amendments will be made to the very simple Bill passed in the House of Commons earlier this month which gave the Government the authority to press the button on Article 50 and begin Brexit negotiations.
The first Amendment which the Lords tried to add was an ambitious one which stated the negotiations must yield a result where the UK stayed in the European single market upon leaving the EU.
This was voted down mercilessly with 299 voting against compared to the mere 136 voting for it.
Markets weren’t expecting a win here, it defied common sense on what membership of the EU entails. However, the much sharper majority than expected has made currency markets more nervous about how the more sensible amendments may be met.
The Pound rallied significantly following the promise from Theresa May that Parliament would be given a vote on any deal reached with the EU at the end of the two years of haggling on both sides of the Channel. However, in true political manoeuvrings managed to avoid committing this promise to a Bill.
Markets are hopeful that this will be added as this suggests to them greater oversight over the Brexit process itself and will achieve a more sensible result in the UK’s interest.
With the Conservatives in the House of Lords already showing their muscle, the slight drops on the Pound are making everyone nervous, with drops across the board against all major currencies yesterday.
This is not necessarily the start of a new trend, with markets showing nerves in the past which have proved to be an exaggeration. However, we will continue to receive news from the House of Lords on how the vote split is going and how the debate unfolds. As long as you detail any upcoming requirements to your account manager, an idea of any potential risk and reward can be detailed to you in order to make an informed decision on your transfer.
This market has been incredibly stable over the past four weeks. Arguably in wait for what the final Brexit Bill will look like, I would not get comfortable, but rather plan for how to protect any transfers you have from market exposure.
In the meantime as we wait for the final news coming out from the House of Lords, the world continues to tick over, and we have a few pieces of UK economic data to be released for markets to trade on.
All in this may be a positive spell to counter a slight deterioration in the Pound this week, with manufacturing and mortgage figures for the UK expected to produce a positive tone. That being said, the spotlight is understandably squarely narrowed towards Brexit developments. As such I would approach the news with modest expectations to what gains may emerge.
The Pound could be set to continue its negative trend as we get further updates around the Brexit in the House of Lords, and with Theresa May just weeks away from her Article 50 deadline, there are arguably more downsides in the very near term. Speak with our brokers today on 01494 725 353 or email myself at email@example.com if you have a short term buying requirement and would like to remove any uncertainty from a transfer.
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