Sterling has fallen heavily against all major currencies since the UK electorates vote to leave the EU in June. The predominate reason for the fall is the uncertainty surrounding the UK economy following the choice to leave the EU.
The market does not react well to uncertainty and the key factor on how successful the UK will be after the vote is how trade negotiations progress.
If the current Comprehensive Economic and Trade Agreement (CETA) between Canada and the EU is anything to go by it does not bode well for UK negotiations. The CETA deal has been put together over seven years and is currently being halted due to a small region in Belgium, Wallonia who are refusing to sign off on the deal due to concerns of globalisation. Belgium’s federal government cannot agree to the deal without the consent of five regional authorities. If a seven year, deal can be scuppered by search a small region the UK could be looking at long and difficult trade negotiations. This is not good news for the pound.
Mark Carney the head of the Bank of England spoke yesterday and was grilled by the House of Lord’s Economic Affairs committee regarding the possible impact of leaving the EU. There had been rumours that details of Carney’s speech were leaked beforehand and due to the anticipated dovish tone Sterling fell in value. Carney has been criticised publicly by senior Tories and PM Theresa May for his actions since the Brexit vote. He did mention he may not continue his position when his contract is up in 2018 adding further uncertainty to the future of the UK economy.
UK GDP Figures come in tomorrow at 9.30am and could cause market volatility. There could well be a fall due to the fears surrounding the UK’s financial stability post-Brexit. If you have a requirement to sell Sterling it may be wise to move before this data release.
For more information on how tomorrows UK GDP estimates could impact your buying or selling requirements, why not talk to our team today on 01494 725 353.
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