GBP slides to a 4-month low
20 May, 2019
Talks between the Labour and Conservative parties ended without a deal again on Friday which saw the GBP slide to a 4-month low against the USD. Last week alone we saw GBP drop 2% against the USD which is its worst week of trading in a year and GBP/EUR closed at its lowest trading level in over 3 months.
With no deal reached last week it looks increasingly likely that the UK will leave the EU without a deal, hence the sudden devaluation of the GBP. Talks have gone as far as they can go. May announced in the Sunday Times yesterday that her new deal is a “bold offer” but Jeremy Corbyn has announced he will oppose the deal and believes it “very difficult” to progress. If we want to save the UK leaving with no deal we have to hope that other members of the Labour Party will vote in favour and more importantly we have to hope that it is a much better “bold offer” that May promises.
The next said Brexit vote will be in the 1st week of June, after which Theresa May has promised to set a timetable for the election of her successor which leads us into a further period of increased uncertainty. Uncertainty provokes fear in investors which does not spell a good run for the GBP.
This week sees the UK take part in Parliament elections this Thursday which is certain to have an effect on GBP/EUR trading levels. It could rock the UK’s political hierarchy and cause investors to move away from the GBP. Speak to your currency broker to understand how to mitigate these risks.
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