Sterling begins this week on a shaky footing as the reality of the Brexit extension sinks in. With no clear news as to what happens in the short-term, sterling could drift lower as any enthusiasm for the pound evaporates.

Currency Pair% Change (Month)Difference on £200,000
GBPAUD3.16%AUD $11,252

In terms of specific events this week, the market may be guided by economic data releases as MP’s are on their Easter recess and will not sit again until 23rd April. There is a busy calendar of economic data ahead this week with Unemployment data tomorrow at 09.30, Inflation data on Wednesday at the same time, then finally Retail Sales on Thursday again in the morning.


These events might well support sterling if the data comes in better than expected. The UK economy has been fairly resilient in the face of Brexit uncertainties, growing slightly faster than expected at 0.2% versus the 0% expected for February. Clients with any sterling positions may benefit from a review with their account manager ahead of what could be a choppy week, as markets reacts to the latest UK data sets.

Brexit Issues Resurface

Will Theresa May remain as Prime Minister?

Theresa May’s plan is still to push her Brexit deal through parliament although she has alienated many in her party from seeking cross-bench talks with Labour to get her Withdrawal agreement through the House.

At present, May can only be toppled if the UK parliament force a vote of no confidence in the current government. This is something for which there is no parliamentary majority. Mrs May is also safe from her own party with no leadership challenge allowed until December, following her success in a previous challenge in December 2018.


Current Conservative Party rules state a leadership challenge can only occur once per year but there are rumours of some members seeking to change that. Writing in the Sunday Telegraph yesterday, former members of the Conservative 1922 Committee said that it was entirely possible this could change if members sought to.

For now, it seems no one really wants a leadership challenge with some cabinet rivals assessing they don’t want a leadership challenge before the Brexit withdrawal Bill is solved. It seems unlikely for sterling to gain too much traction against this persistent cloud hanging over the PM’s head.

EU Declares to Have 70% of Population Vacinnated by Summer

Local and European elections could damage May

Up ahead are some crucial elections which might be used as a barometer of the public’s attitudes and anger on Brexit. The Conservatives could lose many councils and might get punished in the local elections on May 2nd. Meanwhile, European elections for the 23rd May are also rather embarrassing seeing as the UK voted to leave nearly 3 years ago.

If the Conservatives fare particularly badly in either or both, then Mrs May might well be cornered into stepping down as her position becomes untenable. For now, the plan is to keep going and try to get the Withdrawal Bill passed quickly.

Clients with any positions to buy or sell the pound might wish to be making plans ahead of the Easter weekend with no trading days Friday through to Monday. The pound is still hanging onto many of the gains of 2019, but the major lack of clarity still present could trigger losses ahead.


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