Focus remains on Brexit amidst little data- Can you afford the gamble?

7 March, 2019

Matthew Boyle

There is little data from the UK for the remainder of this week, with an interest rate decision from the ECB later today (where no change is expected) and a focus on US data tomorrow with the non-farm payroll release.

As such focus remains strongly on Brexit, as we edge closer to the next UK parliamentary meaningful vote next Tuesday, and the article 50 deadline on the 29th March.

Analysts are suggesting that with the rates currently sat close to a 2-year high against the single currency, that a deal or an extension to article 50 is already priced into rates. And with new media supports suggesting that many backbench Tories will still not support the current deal or an extension, there is a chance that we may still leave without a deal, which would be catastrophic for rates. Some of the top UBS analysts suggest that if this was the case we would see GBP>EUR rates move to parity almost immediately and that soon after that, rates would, in fact, drop below the 1>1 level.

With uncertainty still prevalent and the Brexit date creeping ever closer, it would be prudent to ask yourself, can you afford to take the risk?

If the market is showing pricing in of an extension/ a deal there will be relatively little upward movement if this is the case. Some analysts suggest perhaps 1-2% initially, however, a no-deal would likely see rates drop around 15%….a huge risk to take if you have a big upcoming purchase, and one that could be extremely costly indeed.

Speak to your currency index consultant today if you are concerned about your transfer – we can help you remove a lot of the associated risk involved, whilst providing friendly and professional guidance.