The pound’s intrinsic link to political hype has rarely been stronger with the start of October providing plenty of fireworks from within the Conservative Party, paving the way for a very volatile month ahead for sterling exchange rates. More on the divide within the Conservative Party and the implications on the pound in the market report below.
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Former foreign secretary Boris Johnson’s speech from Birmingham yesterday certainly seems to have rocked investor confidence. His calls to “chuck Chequers”; scrap the Northern Ireland back stop and invest heavily in border technologies to ensure frictionless trade were well received by the 1,500+ people present. It is hard to imagine a clearer reflection of the divisions within the Conservative Party at present.
Furthermore, yesterday’s statement from the DUP would have done very little to rekindle investor appetite. By rejecting the proposed concession between the EU and the UK regarding the Northern Ireland border, Leader Arlene Foster squashed any kind of wriggle room for PM May to capitalise on and get the ball rolling in time for the March deadline. As time goes on, I expect sterling’s swings in value to intensify, highlighting the value of speaking to an informed, proactive broker who can help you get a game plan in place to limit your exposure. It will certainly be interesting to see how the pound reacts today, as PM May speaks to the Conservative Party this afternoon. Will she be able to galvanise the majority and keep her plan on track?
Politics aside, sterling has started the month on the back foot with last week’s disappointing consumer and business confidence releases shaping a fairly bleak outlook for the UK economy, and indeed the pound for the foreseeable.
Yesterday’s pick-up in house prices will have been well received by the markets however, particularly since Bank of England Governor Mark Carney’s worrying comments that a no deal Brexit would see a drop of nearly 15% in average house prices.
For this reason, those looking to buy Foreign Currency with sterling might want to keep an eye on Friday’s next set of housing data.
Given in the past few months we have seen a drop off in demand for mortgages; there might be scope for a slowdown in prices just around the corner, potentially leading to a fall in sterling’s value, making foreign currency more expensive.
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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