Last week’s trading was another positive one for the pound

23 September, 2019

Rob Bastin

Last week’s trading was another positive one for the pound, with its 6th consecutive week of gains against the Euro after hitting a 2 year low in August. Market sentiment has fast shifted away from no-deal fears ever since the legal bill to block this outcome was proposed and passed through the house of commons. Are we however now seeing potential peak rates for the pound in the short term? Whilst Brexit developments have warranted a recovery to the current levels, we have only really seen higher rates than this when genuine optimism of a deal has been present, and whilst the EU maintains for the media that a deal can still be reached by October 31st, this is very subject to the UK government tabling a viable alternative solution to the Irish backstop. To date, there has been no such option discussed or provided to parliament, let alone the EU. Unless something miraculous changes in the next week or two, we could be set for another volatile time in October should Boris fail to secure a deal at the EU summit on 17th-18th, particularly given his reluctance to request an extension on 19th as per the new law.

The main subject that dominated headlines last week was the supreme court ruling over whether or not Boris Johnson’s proroguing of parliament was lawful or not. We can expect a final decision on this in the coming days and as such, this is a potential market-moving event to watch out for, and indeed if ruled unlawful then parliament could be back in action in the coming weeks ahead of the EU summit. The Brexit rollercoaster is reaching its most important month ahead and the events to follow between now and November could shape the future of Sterling for 2020 and beyond. It is therefore vital that anyone with large transaction coming up is in close contact with their currency consultant to make sure you are not caught out with any adverse movements. Our forward contract and Limit Orders and a great way to manage the heightened risk around these major events.

Whilst eco-stats are having less impact on sterling markets these days, below is a list of the main releases for the major currencies to look out for:

9:00am – (EUR) Manufacturing & Composite PMI
2:45pm – (USD) Manufacturing & Services PMI

9:30am – (GBP) Public Sector Net Borrowing

2:00am – (NZD) RBNZ Interest Rate Decision

1:30pm – (USD) Gross Domestic Product (Q2 revision)