No Deal Brexit A Real Concern
22 March, 2019
Yesterday we saw the pound tumble further, following the speech late on Wednesday, which saw sterling slide across the board.
Traders came into a weakened pound on Thursday, which continued to slide throughout the day as concerns grew we might leave the EU in a weeks’ time without a deal by default. With UK ministers not willing to back Theresa Mays current deal and John Bercow denying her another meaningful vote unless the deal changes significantly, May seems to be running out of moves.
Theresa May officially requested an extension to June 30th, but EU leaders, currently meeting at the EU Council Summit, suggest there is little point agreeing to an extension. It seems unlikely May will actually reach an accord with ministers to pass a deal before the extension ends, giving credence to new fears we could be leaving the EU without a deal. So much so, the TUC and CBI joined forces in writing a joint letter to Theresa May asking for a meeting and urging her to refrain from a no-deal Brexit. In the meantime, a petition urging the government to revoke Article 50 has reached over 1 million signatures.
In 24 hours we are down nearly 2 cents against the single currency euro, making €200,000 nearly £3000 more expensive now than it was back on Wednesday. Having broken major resistance floors overnight, and yesterday testing the next floor, we could be on for another break lower in the coming days should certainty over securing an extension to Article 50 not materialise soon.
The Bank of England met Thursday but as expected made no changes, citing Brexit uncertainty the reason for holding fire on any tinkering. Comments from Nordea Bank suggest they feel we could see an August interest rate hike, should a long term extension be agreed, or a November hike should it run until June. Despite this talk, which is usually sterling positive, the slight upside we saw for the pound quickly eroded and then some, finishing at its lowest point for the day at the close of UK trading.
Elsewhere, US employment figures came out better than expected in the afternoon, helping sterling to drop 2 cents over the day against the greenback.
Today we have EU Markit services and manufacturing PMI at 10 am and a speech by ECB member Mersch. After lunch it’s across to Canada for retail sales and inflation reports at 1.30pm, closely followed by US PMI and new home sales figures at 1.45pm.
Its bound to be a volatile end to the week so anyone with a currency transfer to make in the coming weeks, stay in touch with your Currency Consultant to make the most of your money.
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