Risk remains high as Brexit remains the focus
7 October, 2019
Last week saw the Pound start to slip following poor UK services data, as the uncertainty of Brexit continues to weigh heavy on exchange rates. Papers report this morning that Boris Johnson is in desperate last-minute talks to save his Brexit plan, but has been warned simply that EU leaders will not approve.
Johnson is playing a dangerous game, on the assumption perhaps that come the Brussels summit on October 17th a deal will be struck, but in reality this could be more about an extension than a solution given the time restraints. Under the recent Ben act which became Law last month, if no agreement can be made Johnson is expected to request such an extension, however he has vowed he simply won’t. And so, as the clock ticks down it seems the situation is becoming a dangerous one – no deal, a PM who says he will not request an extension, and no assurance even if he did that the EU would accept.
Expect volatility in rates to match the increasing uncertainty we are seeing, and the Pound rates to suffer.
Aside from Brexit taking its toll on the battered Pound, we also have the fear that we may see the UK slip into recession increasing. The services PMI report last week said that there was a heightened chance of this, so a poor UK GDP reading on Thursday could compound sterling’s current woes and increase the chance that technical recession becomes reality.
For those of you with imminent currency requirements who are gambling on it moving, the impending increased volatility will increase the stakes. Whilst with greater risk comes greater reward, certainly the risk is increasing. And with so much uncertainty, it is a risk that would be dangerous to take.
There are several ways we can help reduce this, and protect your budget, including stop-loss orders and forward contracts. Speak to your currency consultant today who will be able to help you minimize the chance the cost of your transfer will increase.
In the coming weeks we could comfortably see rates drop by 4/5%, even without a no deal Brexit. So, don’t take a risk you may not be able to afford and speak to us today.
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