Deadline Week for Brexit

As we have seen for the past few months, Sterling’s fortunes are almost entirely dependant on the ups and downs of the ongoing Brexit situation. This was no different last week, with the Pound enduring something of a rollercoaster as we saw a series of critical votes in the House of Commons give us the narrowest of margins of one vote for legislation to prevent a No Deal Brexit and Extend Article 50. Followed by a move from the Prime Minister to reach across the party divide to Labour to try and break the deadlock, with a much softer, customs union Brexit mooted. Next, a surprise intervention from European Council President Donald Tusk, suggesting he would back a long delay to Brexit to enable a proper rethink of the whole situation. And finally, a first, and rather surprising personal video message from the Prime Minister, to the voting public explaining what is currently happening and why she is taking the approach she is taking.

During all of this the Pound bounced around a two-cent margin with both the Euro and the US Dollar and this morning we find ourselves right in the middle of that same range, as we enter another critical week. On Wednesday we see the emergency European Summit called to decide on the next Brexit steps, ahead of Friday’s next ‘cliff edge’ deadline. Will the UK crash out of the EU on Friday with No Deal or will we once again find that the deadline is pushed back, and if so, will it be a couple of months or longer – maybe the year Tusk suggested?

Whichever way it goes we can expect significant movement on the currency markets – predictions of a huge drop for Sterling if a No Deal comes to pass are very likely, and while stabilising for now, the ongoing uncertainty of a long or short extension is likely to also cause the Pound woes.

Monday

German Trade Balance

US Factory Orders

Tuesday

US Federal Reserve Member Carida Speech

UK BRC Retail Sales

Wednesday

UK Manufacturing Production

UK Industrial Production

UK Trade Balance

UK GDP

ECB Interest Rate Decision

US CPI Inflation

European Summit on Brexit

Federal Reserve FOMC Policy Minutes

Thursday

German CPI Inflation

US PPI

US Jobless Claims

US Federal Reserve Members Carida, Bullard, Bowman Speeches

Friday

Brexit Deadline

European Industrial Production

The week has plenty of other data to consider although whether any of it can suppress the market’s single minded obsession with Brexit is another thing entirely. Wednesday is likely to cause a ruckus though, with a huge amount of critical releases from all three major zones, including UK GDP, the ECB’s interest rate decision, the Federal Reserve’s FOMC policy minutes, and the aforementioned EU summit on Brexit.

Whether we do find ourselves with the Armageddon of No Deal, or whether we enter the long grass of an extension, this could well be the week to consider booking in your currency to remove the risk and doubt of variable rates. Make sure to get in touch with your CI account manager to discuss your options and to lock in your exchange rate before the volatility comes.