The question remains as to whether the UK will opt for a hard or soft Brexit. Liam Fox has suggested the UK may withdraw from the union and look elsewhere for trade deals.
The pound saw sharp falls across the board yesterday after a batch of weaker surveys signalled a gloomy outlook in a number of sectors including car manufacturing and construction. The Chancellor Philip Hammond made clear that there would not be a repeat of the positive GDP data for the second quarter seen earlier this week. The GDP numbers released Wednesday actually saw an upturn in GDP in the run up to the referendum. GfK consumer confidence figures released overnight were also poor having fallen to the lowest level in more than 26 years. The markets so far appear to be shrugging this one off.
It must be highlighted that the Brexit process is going to take a considerable amount of time. There will be more volatility to come even before article 50 is invoked and negotiations commence. The international trade secretary Liam Fox has said that he expects the issue of Britain’s relation with the EU to be resolved by 2020. Furthermore he has suggested that Britain may withdraw from the customs union altogether which could give Britain some better trading terms. It’s complicated and this will no doubt be a difficult period for the UK. The decision that Prime Minister Theresa May now faces is whether Britain opts for a soft Brexit or hard Brexit.
The EU however appears to be retaliating by appointing Michel Barnier as chief EU negotiator for the UK’s exit talks. The former French minister is a good friend of Jean Claude Juncker and is reportedly an EU purist strongly in favour of further EU regulation but also French protectionism. Nick Clegg has stated that “He is no friend of the City of London”. As if that wasn’t enough rumours have circulated that he blames Britain for losing his job in government some time ago. This is a name we are going to hear a lot of! He commences his new role on October 1st. Interesting also that the British government took EDF by surprise last night and put Hinkley point C on ice.
This morning sees a handful of releases to include mortgage approval numbers but it is the European GDP data which could help see some very positive movement for GBP EUR. European stress tests this morning are also expected to put the spotlight on Italian banks which could also help this pair. The Bank of England has said that British banks should be in the clear. Let’s not forget the hugely important Bank of England meeting next Thursday where a package of measures is expected to be announced. Rates are widely tipped to be cut by 0.25% and (or) possibly a bout of Quantitative Easing (QE). This announcement has the potential to be a real market mover with new direction for the pound so please get in touch if you have a pending requirement. It is of paramount importance to be in communication with your account manager to take advantage of spikes in the market as well as reducing exposure to sharp market movements.
James and his colleagues are always courteous and helpful. I have also never been able to find rates of exchange that are more competitive. I am particularly impressed with the service, as I am not in the habit of transferring massive amounts!
As always a really quick and easy transaction. James is very knowledgeable and helpful. Great rates.
Always helpful and they always give rates at the very top of the range. Quick transfers to our french bank account – highly recommended. Well done James Lovick 😉