The pound performed very well last week, rising to fresh 2-year highs on the euro, a 9-month high on the US dollar and post Brexit vote highs against the Australian dollar. This was largely down to the reduced chance of a no-deal Brexit, and the prospect of a delay to the planned 29th exit date of this month.
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Twists over the weekend include the harder Brexit supporting Tories offering to support Prime Minister May’s deal on certain terms. The terms relate to the backstop as they are seek further assurances on its legal status. Prime Minister May has also announced a £1.6bn fund for struggling communities, in what critics have cited as an attempt to bribe votes for her Brexit bill.
The next meaningful vote is planned for the 12th March, and if it fails, MP’s have a further vote on the 13th to limit no-deal, and then on the 14th to extend the exit date. All of this points to a softer type of Brexit and has boosted the pound, events this week and next are vital to the outcome on Brexit and the pound.
The rise in sterling could easily falter as the prospect of no-deal does remain a possibility and investors are forced to factor this into the value of sterling, from a lack of clarity over what happens next. I personally feel the prospect of Mrs May getting her deal through has increased of late, and we will leave the EU on the 29th. Any delays to this date would make Brexit happening much less likely, a risk that I think the harder Brexit MP’s will be unwilling to take.
This morning is the latest Construction PMI data, released at 09.30 am. The Purchasing Managers Index survey is a snapshot of economic activity in the previous month, highlighting the performance in the sector. Friday’s Manufacturing survey was a 4-month low and today’s data could be equally disappointing, predicted to come in just above 50.2 representing expansion but at close to a 1-year low.
The UK economy is suffering from the uncertainty over Brexit, with low business confidence hampering investment and spending decisions by business and consumers.
With fresh political and economic uncertainty the pound might struggle to meet the higher expectations placed on it from last week, and any clients looking to buy or sell the pound might benefit from a review with their account manager ahead of this critical time for the UK.
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Excellent initial guidance, and during the transaction regular communication and updates. Dealing with Jonathan Watson was a pleasure. Very reassuring.
Jonathan Watson provided very helpful advice throughout the process, as well as immediate responses to our inquiries. He and his team were patient and thoroughly professional, which helped us through some stressful moments following the sale of our property in France.