Critical 48 Hours ahead for the Pound, Cash or Bust?

13 November, 2018

Matthew Boyle

So far this week the Pound has managed to stay stable and in fact reverse some of the losses against the single currency, despite the ongoing uncertain backdrop. Last week saw the media report that we are 95% completed on a Brexit deal, and as such, the market reacted positively and pushed GBP>EUR rates to a 6-month high. Quickly, however, this dissipated, as transport minister Jo Johnson resigned warning that the proposed Brexit deal was not one that they had voted for. This has only brought uncertainty to the fore again, with the mainstream media suggesting that 5 other MPs are ready to resign at any time, again disappointed with the current Brexit terms.

The next 48 hours are crucial for Brexit talks, particularly if we are to reach an agreement in the short term – many economists suggest that if an agreement is not reached in principle in Wednesday it will be near impossible to hold a summit this month and will only pile on pressure to effectively implement any deal come to the March Brexit deadline. And whilst the Financial Times has quoted EU negotiator Michel Barnier as saying a treaty is almost ready, is has also quoted him as saying that a final agreement has not been reached and that the final leg of a negotiation is always the most difficult.

This is an extremely important time for the Pound, as the notion of a deal has and will continue to help stabilise rates in the short-term, however as Barnier alluded to – no agreement has been reached, and of course let us not forget about the elephant in the room that is the Irish Border.

Should the deal be unacceptable to the backbench Tories, or the DUP we could still be looking at a leadership battle and potentially a second referendum. Given the ticking clock, huge uncertainty and with GBP>EUR rate close to the best in 6 months, now could be a time to cash in before the Pound goes bust.

Whilst GBP rates do remain driven by Brexit sentiment at present, we do have some market data today – UK unemployment this morning at 09.30, and Eurozone GDP and 10.00 both of which could see rates move dependant on the results. This afternoon we also have US inflation data and a speech from FED member Powell, both of which again could move the market, with the USD gaining ground across the board again in recent days following last week’s mid-term elections.

Should you have any requirements, the next few days are likely to be turbulent ones, so speak to your currency Index broker today for some friendly and professional advice, particularly if you would like to consider removing the risk of a rate drop and the cost of your transfer greatly increasing.