As covered so well yesterday by my colleague Joseph Wright, the customs union, and more importantly whether we remain within the customs union or not, is quickly becoming the biggest talking point of the week so far and the biggest mover of Sterling exchange rates.

In fact, the latest Brexit debate would have meant clients buying at last week’s high compared to this week’s low would have meant an extra €4460 and $8000 on a typical £200,000 transfer. This is reflected in the table below:

Currency Pair% ChangeDifference on £200,000
GBPEUR1.62%€4460
GBPUSD2.87%$8000
GBPCAD1.30%CAD $4620
Cabinet Spilt to organise customs issue

The government now has the difficult tasks of keeping everyone happy. Last week’s defeat in the House of Lords meant that the government would now have to outline the reasons for staying in the customs union.

Pro-Brexiters quickly warned Theresa May that any U-turn could spark a political backlash. As Downing Street delivered the news on Sunday, Sterling’s value dropped. 

The value of the pound now hangs on future debates regarding the Customs Union, with crunch talks starting tomorrow. Prime Minister Theresa May has the difficult task of keeping everyone happy.

Leaving the customs union altogether is effectively a hard Brexit and as we have seen too many times in recent months, any hint to this and the pound will likely drop.

UK business, opposing political parties, the Irish border problem and the EU are all pushing for the UK to remain within the Union – if she agrees, she could potentially face expulsion from her own party which could create political uncertainty and harm the pounds value. Leaving the customs union altogether is effectively a hard Brexit and as we have seen too many times in recent months, any hint to this and the pound will likely drop. The outcome will be key for the Pound’s value in the up and coming weeks and not one that clients want to miss – get in touch to keep informed.

UK economic data – Public Sector borrowing and Friday’s GDP data

With no major economic releases this week until Friday, the UK’s better than expected public sector net borrowing figures took the headlines yesterday. The budget deficit dropped to its lowest level since 2007 and could pave the way for public services spending at some point this year.

Whilst I predict that Sterling’s value is very likely to be determined by Brexit developments, Friday’s Gross Domestic Product figures could also carry significance. A question mark remains over next month’s Bank of England Interest rate decision due to an apparent slow down within the UK economy, with inflation slipping off last month. Poor UK GDP data could cause further uncertainty and create an even more difficult for the Bank of England to answer.

For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.