Brexit Deal Given EU Go Ahead
26 November, 2018
As last week ended with a slight uptick for sterling, as a Brexit deal was agreed and optimism surrounded the upcoming EU summit, where it was expected EU leaders would accept the deal.
From the UK’s point of view, this is neither here nor there, as we still have to get the deal through Parliament and there is already been a lot of anger at the so called deal. But despite that, the pound ended up against the euro on Friday, reaching its highest level all week.
Sunday came and as thought, the 27 EU leaders agreed the deal, although did say, this is the only deal they will accept and wont start new negotiations should the UK Parliament turn the deal down. With that in mind the coming weeks will be critical for Theresa May in trying to garner enough support to see it through a vote, otherwise she and the UK will no doubt be in turmoil come the end of the year.
If it’s turned down we could see all sorts of scenarios played out, including a leadership no confidence vote and potential calls for a general election. Any negativity surrounding the deal and more importantly, no Parliament backing will almost certainly cause panic amongst investors and see the value of sterling plummet. With the precarious position May finds herself in, those with an upcoming currency exchange to make before the end of 2018 may be prudent to look at securing sooner rather than later, should the worst happen next month when it goes to vote.
At the time of writing, the deal had been agreed but financial markets were yet to open, so we are yet to see how the news will be received.
The week ahead gives little of key data releases to move investor sentiment so the Brexit deal will most certainly play the lead role.
Monday concludes the EU summit while later in the day ECB President Mario Draghi speaks ahead of a speech by BoE Governor Mark Carney. Wednesday we have GDP released for the US ahead of a speech by Fed chief Powell.
Thursday sees the release of US inflation and the FOMC minutes for their last interest rate and policy meeting, while the week concludes with EU inflation and their unemployment rate.
A few key releases to go on, mainly across the pond, while the UK and EU markets will be digesting and reacting to the agreed Brexit deal. Will continued discontent keep a cloud over the pound or will the silver lining shine through and the a rally be made? A lot of uncertainty for sure, so make sure to stay in touch with the team for some friendly guidance and regular updates.