GBP exchange rates rose yesterday against every major currency pair, with the cable rate (GBPUSD) breaching the key 1.30 level. It’s been a positive week for the Pound despite many financial commentators predicting that it would likely fall in the aftermath of Prime Minister May’s Brexit plan being voted down.
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Personally I think the currency markets view the current impasse in Brexit negotiations as a reason to extend Article 50. This would allow the UK to continue to trade with its European Union (EU) neighbours in the same fashion that they currently are after the scheduled Brexit date of March the 29th. This is perhaps the reason for the stronger Pound, as financial markets are keen on avoiding a no-deal Brexit which interestingly is becoming a more popular route, especially amongst the stanch Brexiteers both inside and outside of Westminster.
Much of yesterday’s strength surprisingly came after the release of a negative CBI Industrial survey release. 2017 was a positive year for the UK’s manufacturing sector, perhaps owing to the weaker Pound increasing exports. Last year on the other hand was tougher as Brexit uncertainties seemed to take their toll on sentiment surrounding the UK economy, although December’s figure was surprisingly high. This resulted in analysts expecting another strong figure yesterday. The results were well below expectations, but despite this Sterling strengthened which just goes to show that politics is the main driver for GBP exchange rates in the current climate.
Sterling remained unchanged yesterday afternoon despite UK Prime Minister, Theresa May ruling out the blocking of a No-deal Brexit. Those of our clients and readers planning on making a Sterling currency exchange in the next few months should be aware of this possibility, as there’s a chance Sterling could drop dramatically in the event of a no-deal Brexit.
The former Chancellor of the Exchequer, George Osborne, who was sacked by May when she became PM suggested yesterday that delaying the UK’s exit from the EU is now the ‘most likely’ option. This is perhaps another reason for yesterday’s gains as either a No-deal or an extension to Article 50 are now looking like the most likely outcomes.
The 29th of January is likely to be the next key date in the Brexit calendar. The House of Commons will vote on May’s Plan B on this date, and then another meaningful vote will take place in February although this date is yet to be decided. If you wish to get a 2nd opinion on a transfer you plan on making, do feel free to register your interest with us.
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