Unfortunately, there appears to be little reason for optimism at present regarding the Pound. The lack of clarity surrounding Brexit is weighing heavily on Sterling and investors are cautious as the possibility of a “no deal” scenario is still a possibility. The Sterling report below looks into the latest Brexit updates and the impact on the Pound. The table below shows the range of a number of exchange rates during trading hours on Friday.
|Currency Pair||% Change||Difference on £200,000|
Following last week’s interest rate hike Mark Carney spoke regarding future monetary policy. His outlook was not a positive one.
He warned that the possibility of a “no deal” Brexit is uncomfortably high.
When commenting on whether a “no deal” situation would be a disaster he said the following.
It is highly undesirable. Parties should do all things to avoid it.”
When asked about the consequences of Brexit he said “disruption to trade as we know it, As a consequence of that a disruption to the level of economic activity, higher prices for a period of time.”
If you have a requirement involving Sterling short term it would be wise to be in close touch with your broker and have realistic expectations. There is potential for further losses.
Theresa May cut her holiday short in the Italian lakes to meet French President, Emmanuel Macron on Friday at Le Fort de Bregancon.
This was an attempt to overcome the current impasse on Brexit after the Chequers proposal was rejected.
EUs chief negotiator Michel Barnier has recently said the following about the UK’s intentions.
"Some UK proposals would undermine our single market which is one of the EU's biggest achievements.
"The UK wants to keep free movement of goods between us, but not of people and services."
Friday’s behind closed doors meeting could be an attempt to go above Barnier’s head or simply an opportunity to go through the Chequers plan face to face is yet to be seen.
It does show May making an effort since taking the reigns however. It will be interesting to see if we see any news following the meeting which will give an indication as to which way talks are heading.
Short to medium term I still expect the lack of clarity surrounding Brexit to hold back the Pound.
GDP data is due out on Friday and will be watched keenly by investors. GDP is a key indicator as to the health of an economy and can influence monetary policy moving forward.
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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