Luck of the Irish, or bordering on fake news?

5 October, 2018

Matthew Boyle

This week has been a busy and positive week for the Pound. Following a well-received conference speech by Theresa May (any robot dancing aside) we have seen the Pound gain, amidst renewed optimism over a trade deal being reached, and one that would still allow the UK to take a seat at the World trade organisation. Her speech certainly seemed well oiled – the dancing taking away the platform for many of her critics, and her rhetoric around the Irish issue did certainly boost confidence, at least in the short-term. This combined with a report printed in the Irish times suggesting that Mays plan would resolve the Irish border issue without the need for a hard border. This raised hopes within the market and as a result we now see the Pound at a 2 month + high against the single currency, and making slow gains against the USD once again, despite its interest rate hike last week.

Two things remain slightly concerning however, yesterday Donald Tusk, the European Council president suggested that whilst he would in principal agree to the UK having a deal like Canada, he felt the UKs current proposal which asking for more. Whilst then it seems the EU would now be open to accepting a Canada like deal, this would be an agreement which would not remove the need for a hard Irish border – something May will simply not agree on. The other issue is that of course is that Chief EU negotiator Michel Barnier has already rejected Theresa Mays plan, so are we to believe suddenly as a result of a news article in Ireland that we are on the road to agreement? We have seen the result of fake news in recent weeks with similar reports form Germany moving the market before being rubbished, so could this be Fake news or simply the Luck of the Irish?

What is apparent is the it is GBP that is largely driving the currency movements within its pairings. And with so much uncertainty still rife, you can expect a lot still to happen ahead of the EU summit on the 18th October. We have seen Sterling at these levels several times over the past few months and on each occasion, rates have quickly dropped back down as optimism over Brexit fades, and the line in the media changes.

Today we have already seen UK house price data come in slightly worse than expected, and whilst the market is fairly sentiment driven at present poor date can always move rates. This afternoon we have Non-farm payrolls from the US, which can always move the market and should it be a weak reading this would also encourage the Euro to start to claw back against the Pond.

If you are concerned about your upcoming transfer or purchase, remember that you can lock in your exchange rate and take out the risk of any potential declines. So, speak to your Currency Index broker today for some guidance on how to remove the risk of the rate dropping and your cost increasing in this very volatile and sensitive market.