With the EU Summit fast approaching it’s no surprise that Brexit related stories are being released on a more frequent basis, and for clients that are buying a foreign currency, it hasn’t been particularly good news. GBPEUR exchange rates have now dropped below 1.10 and GBPUSD below 1.29. The Sterling report below looks into the continued pressure on the Pound caused by negative Brexit updates, and the table shows the range of exchange rates for a number of currencies throughout the last 30 days highlighting the importance of timing your transfer effectively.
|Currency Pair||% Change||Difference on £200,000|
Over the Bank Holiday French President Emmanuel Macron when giving his annual foreign policy speech, told UK Prime Minister Theresa May that EU unity trumps close ties with Britain and therefore the chequers proposal does not benefit the European Union. The concern for Macron is that if the EU give the UK a bespoke deal, this could lead to other countries leaving the EU in a bid for their own bespoke deal, he referred to it as unravelling the European union. The commentary from the President is similar to recent commentary from Michel Barnier, therefore I feel that Theresa May will have to offer more to the European Union if she wants a trade deal.
Yesterday Sterling followed the common trend that we have been experiencing in the recent weeks and fell against most major currencies. The UK Prime Minister found herself downplaying Philip Hammonds warning last week that a no deal would leave Britain’s economy £150billion smaller in 15 years, GDP would continue to fall also and borrowing would rise by £80bn by 2033-2034. The PM stated the figures are a work in progress which completely undermines the Chancellor in my opinion and that’s why investors sold off the Pound, which made buying foreign currency more expensive.
With Brexit a complete unknown, I expect Sterling could find itself under further pressure in the months to come. The key date to look out for is the EU summit on the 18th and 19th October. However, this morning, Bloomberg have a released an article suggesting both the UK and EU both see mid-November as the date for a deal to be finalised and not the EU summit. My personal opinion is that the EU will offer an extension however I actually believe it will be until the summit in December and not Mid November. Looking past the December summit if a deal is not reached, I actually believe the UK could face a general election before a no deal scenario. To keep up to date with regular market information as it enfolds, feel free to outline your currency requirements to your account manager.
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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