Pound up three cents against the Euro
10 October, 2018
Following a few weeks of Brexit uncertainty limbo on the currency markets, we have finally seen some definitive movement and for those of you with Sterling in hand and a currency requirement overseas, it has been good news, with the Pound up three cents against the Euro and two cents against the US Dollar, in just a few days.
The main reason for this has been clear signals that a Brexit deal may well be just around the corner. Key figures on both sides have come out in the last couple of days and stated they are “confident of a Brexit deal this autumn” – Dominic Raab, and there is “a good chance of an accord by the end of the year” – Jean Claude Juncker.
Any deal that avoids the cliff edge of a no deal Brexit is viewed as a very good thing by investors and so Sterling has been able to gain significantly. However, you only have to look at the acrimony in the House of Commons yesterday to understand that any deal agreed between the government and the EU is only really the beginning. Keir Starmer, the Shadow Brexit minister, made it very clear in his questioning of Dominic Raab that he does not believe a deal is close, he does not think a deal based on the Chequers plan is viable and he doubts any deal brought to Parliament will be voted through. Added to that what can only really be described as a threat from the DUP to the Tories in the form of Nigel Dodds informing Dominic Raab that the DUP would “not tolerate anything that separates Northern Ireland from the UK – in terms of customs union or single market”, and that he should “not repeat that mistake of bouncing the DUP and accepting a deal which crossed that red line at the last minute”.
So, in short, it seems a deal is possible but far from a foregone conclusion, and there will likely be many twists and turns still to come, with all of the uncertainty that brings to the currency markets. Could these current Sterling highs be a great opportunity to secure your currency, as it seems unlikely that this is simply the beginning of an upward trend?
Today sees a raft of key UK ecostats in the form of Industrial and Manufacturing Production numbers, Trade Balance figures and critically UK GDP, so in addition to the ongoing Brexit negotiations, Sterling has to contend with these too. Make sure to stay in close contact with your CI account manager to be kept informed of exactly what is happening and what your options are for your upcoming currency requirement.