Sterling strength cut short on renewed No-deal Brexit worries

18 December, 2019

Grace Rae

Markets woke to news yesterday that the Prime Minister had decided to block any further extensions to the Brexit transition period and in doing so giving the UK a firm deadline to negotiate a trade deal in time for our exit from the EU on the 31st October. Parliament is set to be officially open tomorrow following the Queens speech so the PM could amend the withdrawal agreement bill as early as Friday. As a result of the news the Pound dropped more than 1% removing the gains made during the lead up to the general election and opening exchange rates once again to Brexit speculation. This news isn’t great for Sterling as it increases the chances of a hard Brexit or worse, a no deal Brexit as its limits the time frame Government have to negotiate a deal that suits both the UK and the EU equally.

Safe to safe the next few weeks, and months are going to bring more volatility to exchange rates.

There was also a mixed bag of economic data for the recent quarter in the UK as Unemployment Rates posted 3.8% while markets were expecting 3.9%. Showing unemployment rates in the three months leading to October have dropped to the lowest levels seen since the early 1970’s although this look to be good news this was muted by (while good, its not as good as expected) Average Earnings including bonus data which posted 3.2% while markets were hopeful for a 3.4% growth.

More data is due to be released today and over the remainder of the week. So worth keeping note of.

09:30 GBP Consumer Price Index, Producer Price Index and Retail Price Index
10:00 EUR Consumer Price Index
13:30 CAD Consumer Price Index
21:45 NZD Trade Balance and GDP

Overnight AUD Employment Change
09:30 GBP Retail Sales and BoE Interest Rate Decision
13:30 USD Initial Jobless Claims
15:00 USD Existing Home Sales

09:30 GBP Public Sector Net Borrowing and GDP
13:30 USD Core Personal Consumption and GDP
13:30 CAD Retail Sales
15:00 USD Personal Income.

Although the drop off from recent highs may be disappointing for those looking to sell their Sterling, it’s important to remember these current levels are still only a couple of cent’s off the recent highs and have been much known to go much lower when faced with news related to a potential hard Brexit. If you are still looking to secure your currency ahead of our Christmas Holidays but may not have the full funds available to settle, then get in touch with us at CI and ask us about our forward contracts. They allow you to lock in a rate for your full currency requirement with just a 10% deposit meaning you can happily go into the Christmas and New year festivities knowing your currency is safe and secured.