Pound resilient despite continued uncertainty
1 April, 2019
It hasn’t been an easy few weeks for anyone sending payments abroad – we were supposed to have left the EU on Friday last week, but there is still no clarity on how, if, or when it will happen. The Pound has been run ragged with the constant changes in likely outcomes but has held up remarkably well against the Euro and other currencies, with GBP-EUR rates at the moment not a million miles away from their best since the general election two years ago.
Of the many possible outcomes of the Brexit crisis, a no-deal Brexit (which could happen on April 12th if nothing changes) and a general election are the two scenarios most likely to send the Pound into free-fall. The risk of both should not be underestimated, although if somehow Theresa May manages to get her withdrawal agreement passed at a fourth attempt, we could see sterling move higher. A longer extension, with the UK participating in EU elections and potentially holding a referendum on either a proposed leaving mechanism, or not leaving at all, is more of an unknown quantity for exchange rates.
On balance it could be argued that current rates are unlikely to get significantly better, but could get significantly worse, and it may therefore be worthwhile considering using a forward contract to lock in a rate if you need to send money abroad in the coming weeks.
The current Brexit timetable is as follows:
Today MPs hold another set of votes on Brexit options to see if they can agree a way forward
Wednesday 3rd Potentially a third round of so-called “indicative votes”
Wednesday 10th Emergency summit of EU leaders to consider any UK request for further Article 50 extension
Friday 12th Brexit day, if UK does not seek, or the EU does not grant, a further delay
May 23rd-26th European Parliamentary elections
We also have economic data from around the world to consider, with UK manufacturing this morning, and key employment market data in the USA and Canada on Friday. Along with Eurozone retail sales and events intensifying in UK Parliament, it could be another unpredictable and volatile week for exchange rates.
0930 UK manufacturing
1000 Eurozone inflation
1330 US retail sales
1500 US manufacturing
0430 Australian interest rate decision
1000 Eurozone unemployment
1330 US capital goods expenditure
0130 Australian trade balance
1000 Eurozone retail sales
0700 German factory orders
1330 US non-farm payrolls
1330 Canadian unemployment