Pounds struggle continues
25 October, 2018
It has been another tough few days for the Pound. Whilst it has remained steady in recent days against the single currency, as the market continues to digest what will happen with Brexit, against the Dollar it has only lost ground. The Dollar as always remains a safe-haven currency, and with Brexit having an impact on both sides of the GBP/EUR cross the greenback is benefiting. News from Italy that the European Commission rejected plans to resolve their budget deficit has only encouraged the Euro to weaken against the Dollar, which in turn through the see-saw effect has encouraged it to further strengthen against the Pound. This may be slightly concerning, as given the dropping Dollar is in part helping keep GBP>EUR rates afloat, we must ask how long this will last?
Media reports this morning suggest Theresa Mays meeting with the 1922 committee yesterday was a successful one or at least one she escaped unscathed. The Pound remains flat this morning and safe….. at least for now. We have no data of note out today, so once again market sentiment will prevail in moving rates. If we take note of the USD position and where GBP>EUR rates currently are it may pose a warning to GBP/EUR rates dropping in the short -term. We are coming down from a 3-month high which was reached on the premise a Brexit agreement was close. It comes to light that this Is not the case, and we have seen rates start to drop off. News that the EU November summit has been scrapped as we are nowhere near a deal has only bought more uncertainty back And whilst May seems to have bought at least herself some time with the 1922 committee response yesterday, the Brexit clock continues to tick and likely pressure on her and a move towards the 48 letters required to trigger a leadership challenge increasing.
Should the Dollar begin to weaken or correct, or any Euro strength resume we will see GBP>EUR rate drop, and this looks like the far more likely outcome as we stand, as concerns over reaching a Brexit deal return and the Pound remains the weakest of the 3 major currencies.
If you have any currency requirements in the coming months you would be well advised to get in touch with Currency Index sooner rather than later. We can offer several ways to help you protect your Budget, and as we creep ever closer to the March Brexit deadline with no firm agreement or deal in Place, Market volatility will only increase and as such the risk to your budget and purchase. Speak to your Broker today for some friendly and professional guidance.
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