As we enter into the last phase of negotiations around the Brexit deal, supposedly concluding within the next 60 days, every comment or change in view is resulting in large swings in the value of the Pound. For example, on Friday of last week when commentary came out suggesting we were further away from a Brexit deal the Pound's value fell by 1.5% in the space of a few hours, equating to a loss of €3,000 or $4,500 on a £200,000 transfer.

Currency Pair% Change in 1 monthDifference on £200,000
GBPEUR2.7%€6,000
GBPUSD3.8%$9,700
GBPCHF2.5%CHF 6,250

UK Political conference season hits the Pound

Currently UK politics are at an even higher level of uncertainty as the political conference season is in full swing.  The Labour leader, Jeremy Corbyn said yesterday that he was ready to lead at his party conference and suggested that he would bring in a tax for listed companies in the UK. Not something that would probably result in further investment into the country. Labour also confirmed that they would back a second referendum on Brexit if re-elected.

The Conservative conference starts later this week and there were suggestions that there may be a snap election in November. This was then ruled out as to not be ‘in the national interest’. All of these changes show the potential speed bumps for Brexit and therefore the Pound in the coming months. Most of these political events would be seen as rather negative and could well push the Pound value down. Something to consider when reviewing the risks to holding out any currency transfer until a later date.

Bank of England commentary could move the Pound

Bank of England commentary could move Sterling exchange rates

Later today we have the latest update from Mark Carney, the head of the Bank of England. This is scheduled for 15:00 this afternoon and is the next potential event for change in Sterling value.

Mr Carney has recently extended his tender to cover the Brexit period but has continuously been negative on the impact to the UK economy from Brexit. If this tone continues we could well see the Pound's value fall further through this afternoon’s session.

October’s economic data cycle set to start

Tomorrow UK GDP figure are released but next week is really when we have a number of UK data updates as we start the next monthly cycle of economic information. On Monday we have PMI data and mortgage date, Tuesday PMI in the Construction sector, Wednesday PMI for Services and Friday housing data. Generally, data for the UK has been doing OK but the rate of growth has been falling. The OECD (Organisation for Economic Co-operation and Development) downgraded their forecasts for UK growth from 1.4% to 1.3% in 2018 and from 1.3% to 1.2% in 2019. Interesting UK retail stock market investors’ confidence has also fallen sharply due to future uncertainty, Hargreaves Lansdown reported last week it was now at the lowest level since 1995.

60 day Market forecast for the Pound

Generally, I personally expect the pound to continue in the uncertain path it has been moving in until Brexit is resolved. Rates won’t move in a straight line but generally Sterling’s value has been either climbing slowly or dropping steeply. I see rates over the coming 60 days either climbing a few cents or dropping by twice as much if Brexit results in a snap election, change of government, a no deal or even a poor deal remembering that it is not in Brussels interest to give the UK a good deal as other member states could well follow. As well as this the Chancellor yesterday confirmed the date of the next UK Budget as 29th October so the next 3 months should be very interesting and indeed changeable for the Pound.

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