Debate between Jeremy Corbyn and Boris Johnson
20 November, 2019
The most meaningful event of the day was the debate between Jeremy Corbyn and Boris Johnson, with Conservatives still in control of the election and no other major headlines that GBP cares about. Although we’ve seen the mid-market rate go up over the last few months, with the election next month and the upcoming Brexit deadline in January we should expect some volatility in the coming weeks.
Recently, the Pound has remained fairly stable with very little movement in the market, trading within a half cent range against the euro, however, a snap poll after last night’s political debate showed an evenly divided opinion over who won. Although the Conservatives remain seemingly in control of the election the divided opinion over the debate could mean less of a chance for Tories getting the majority on their own. Even if Corbyn doesn’t win and just keeps Johnson from getting a majority, we could be looking at a hung parliament, which as we have seen in the past, is not good news for the pound.
Sterling strengthened as the chances of a no-deal Brexit grew, as it stopped months of uncertainty that was holding back business investment. Brexit’s uncertainty has led to an underestimation of the GBP. Instead of investing, corporations replaced capital with a labour that undermined productivity growth, which was not good for British corporations. Foreign exchange markets are now awaiting the December 12th elections, noting that if British voters get a conservative majority, it is likely that the deal will be finalized in early 2020.
With the above said, if there is no majority, we are likely to see the opposite effect, with the pound yet again coming under pressure as Brexit remains on an uncertain path. If you have a currency requirement coming up in the coming weeks or months, it might be prudent to take advantage of the current gains and lock your rate in on a forward contract, with just a 10 percent deposit. Speak to one of the currency consultants today, to discuss further.
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