With Brexit progress likely to be the focus for this week, this Pound Sterling update examines the current situation and the events that could affect GBP rates. The table here displays the market movements for a number of currency pairings in the last 30 days:

Currency Pair% ChangeDifference on £200,000
GBPEUR2.60% €5,780
GBPUSD3.7%$9,680
GBPAUD4.96%AUD $16,920
Carney’s curve balls to unsettle the Pound?

Brexit events this month that will impact Sterling exchange rates

Last week the Pound made substantial gains against all of the G10 currencies as UK Prime Minister Theresa May announced that the UK is willing to pay €50bn as a divorce settlement bill. This was received well by the EU, and currency speculators bought the Pound in anticipation that future developments will be positive in the month to come.

This month Brexit negotiations are in full flow. Today, Theresa May will meet with the President of the European Commission, Jean Claude Juncker to continue the talks surrounding the divorce bill, EU citizens rights, but more importantly the Irish border.

Late on Friday evening the President of the European Council Donald Tusk announced that “the UK’s future lies, in some ways in Dublin.”

UK Prime Minister Theresa May is stuck between a rock and hard place as her plans are to take the whole of the UK including Northern Ireland out of the single market and customs union. The Republic of Ireland have made it clear they don’t want a hard border as this would have a major impact not only on trade with Northern Ireland but also the peace agreement that has been in place since 1998.

Theresa May has hinted that the Republic of Ireland could have different custom regulations to the rest of the UK however the DUP have made it clear they will walk away from the Conservative party if this is Theresa May’s plan, paving a way for Jeremey Corbyn and the Labour party. A positive for Mrs May is that Donald Tusk agrees with the UK and believe stage 2 negotiations need to begin before the Irish border deal is sorted. Therefore this could be a good month for the Pound.

On the 14th and 15th of December EU leaders will meet in Brussels for the EU economic summit. The European Council will discuss Brexit however most of the decisions will already be made and at this meeting we will hear the verdict to whether the UK and EU will start trade negotiations in the New Year.

However, EU ambassadors that will decide if the UK and EU will begin trade negotiations will actually be meeting on the 11th December to discuss if enough progression has been made. Currency fluctuations occur on the back of rumour as much as fact. If there are leaks that a decision has been made I expect major volatility before the 14th and 15th December.

For clients that are involved with a Sterling currency transfer Brexit negotiations could go either way and therefore have a major impact on the exchange rate you receive. I would recommend regardless if you are buying or selling the Pound, to get in touch with your account manager immediately.

More problems for the Conservative party

In recent months UK Prime Minister Theresa May has had to reshuffle her cabinet. Michael Fallon quit immediately after sexual allegations were made against him and Priti Patel was sacked for having unsanctioned meetings with Israeli officials.

At present the First Secretary of the state Damian Green is under pressure as retired Scotland Yard detectives told the press that there were thousands of pornographic images on the MPs computer that was examined in an enquiry back in 2008. To make things more difficult for the PM the Brexit secretary David Davis has announced that if Mr Green is fired he will resign. Mrs May will hope this story fades away and her focus can be on Brexit negotiations, but again if more MPs are sacked or resign this could put pressure back on the Pound.

Other economic data releases to look for this week

Theresa May’s meeting today I believe will cause the most amount of volatility this week however it’s also important to analyse the economic data releases when buying or selling Pounds. The important release to look for is on Friday when the UK release the latest Industrial and Manufacturing numbers at 9:30am. Forecasters are suggesting yearly industrial and manufacturing numbers are showing a slight improvement, whereas the monthly figures are set for a decline. It could be the case that the figures counteract one another.

For more information on how future data releases could affect exchange rates, call our trading floor on 01494 725 353 or email me directly at drl@currencies.co.uk.

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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.