The pound looks set for more testing times as the market eagerly awaits the Brexit vote next week. Last night the Government suffered a 40-year first, losing a vote on a Finance Bill. The legislation was aimed at removing Treasury powers to prepare for a no-deal Brexit.
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Sterling was largely unmoved and has been labelled as untradeable in recent weeks as investors avoid the currency for fear of being wrong-footed by sudden changes in sentiment.
A positive outcome for sterling would be the passing of the Brexit Bill in the House of Commons. There is still a belief that the EU will offer some concession over the troubled backstop arrangements and help keep rebellious Conservative MP’s onside. This ‘concession’ may be before the vote or after, there are also many conflicting reports saying any possible concession is not possible.
The negative outcomes are numerous and include a no confidence motion in the Government, a Second Referendum and a General Election. Such possibilities would surely see the pound lower. Other alternatives include the vote to be postponed for further amendment, the 29th March Brexit date to be postponed and a no-deal Brexit to be pursued.
Today is a GDP, Gross Domestic Product estimate and tomorrow a Credit Conditions survey from the bank of England. Friday is important with the latest news on Industrial and Manufacturing data and more GDP data.
The vote next week is the main event and despite volatility, sterling has been trading in a fairly narrow range as the market waits for the big news.
The pressure is building and it seems highly probable next week will offer some big move on the currency markets for the pound.
With all manner of outcomes possible, clients with a position to buy or sell the pound should be making plans sooner than later, to ensure they do not miss out from any sudden changes in this unpredictable market.
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