Positive Week for Sterling
23 October, 2020
With the rates having been in a range-bound market for the last few weeks we have finally seen the market given the stimulus it’s needed to break out. It has been a positive week for Sterling especially on Wednesday having the largest daily gain across Euro and Dollar since March 2020. This was following Barnier’s statement Wednesday morning saying the EU is committed to making necessary compromises to ensure a deal is made. Now suggesting the EU is willing to take a different approach to negotiations moving forward.
Following this, it has created a huge amount of positivity for sterling after the negativity the week before with the UK beginning to prepare to leave without an agreement and be left with an Australian style trade deal come the 31st Dec. The EU and UK have now agreed to intensify negotiations stating they will take place every day including weekends until a deal is agreed. This now increases the chances of a deal being made and so has given sterling the boost it needed in terms of a bit more certainty.
However this sterling strength isn’t going to last forever, a deal still has to be made and there is still no clear path in sight for this. The closer we get to Dec 31st the more volatility we can expect with the clock slowly ticking down. Please take advantage of the current highs as any updates regarding trade deal progress could impact the rates significantly and leave you having to pay more for your euros.
Please contact your currency consultant today to discuss what strategies we can put in place to help limit your currency risk.
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