Sterling slides again
30 November, 2018
Yesterday continued the poor 24 hours the Pound has had. After initially dropping on Wednesday evening the slide continued through the day dropping another half a cent on Wednesdays close, the weak future outlook should we see a no deal Brexit leaving any early gains made in the week nullified. The day was a quiet one with the absence of any key data, trading was heavily sentiment based. Theresa May was grilled however in the morning by senior MPs and has again ruled out the possibility of a second referendum.
As November closes and we enter a fresh a raft of data is expected next week, as it is at the start of every month. However, the markets seemingly waiting for the key date of the 11th December where parliament votes on the current Brexit deal. Early indications and rumours suggest that the deal passing is highly unlikely and as a result we could see the Pound in freefall, potentially at 1.05. Should the result be the worst case scenario expected we could see a snap election (another one) and/or a leadership challenge. There could be a 5% swing in the rates should this scenario arise in less than 2 weeks time, does your budget stretch far enough to cover for these losses? If not then why not take advantage of our forward contracts, ideal to protect yourself against the fluctuations of the currency markets. In the last 3 weeks alone we have lost 3% off the peak rates off earlier this month, and this could be repeated with the uncertainty still surrounding us.
Today is another quiet day in the markets, as it is normally this time off month. Next week brings fresh data and no doubt further build up to the vote in the coming weeks. To be kept up top date please stay in touch with your account manager here at CI.