Sterling is understandably weaker as we are finishing 2018, owing to the market struggling to make sense of Brexit. The next key date is in January which sees the parliamentary vote on Mrs May’s Brexit plans, which could be a major market mover.
Before then there could be plenty of volatility as the market is provided with more headlines concerning the possible outcomes. The key point is what type of Brexit the UK is likely to be receiving, I personally feel that ultimately a deal will be struck and Mrs May’s Brexit plan will get through parliament, this might see sterling rise.
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If the deal is not voted through, then the Conservatives and Mrs May could very quickly be out of office. Would the MPs risk the loss of their power and opening a door to a Jeremy Corbyn Government? That is essentially the question they will have to ask themselves as the date approaches.
Today sees Mortgage approval numbers released which will provide some news as to the latest developments in the housing market. This is not likely to be a huge event but with thinner trading volumes, any surprise numbers could have a little more impact than usual.
Expectations for the pound over the last two remaining days of 2018 may be linked to any fresh news on Brexit. With no economic data to be released the market will keep its ear out for any headlines or comments, which could sway the market’s view over the possible outcomes in the future.
Overall, the expectation for 2019 is more turbulent times ahead for sterling with a strong possibility the market will react very badly, should Theresa May’s deal fail to get through parliament. She would then possibly be forced to resign and this could make for a very choppy time on sterling rates.
Clients with a position buying or selling the pound should be very careful about gambling too much. For a quick review of your position get in touch today.
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