What goes up, must come down. That’s what’s happened to Sterling over the last few days, but we are seeing a slight recovery as we progress through the day.
Last week was a very good one for the Pound. We saw GBP/EUR rise to €1.15, a level not seen for 6 months and very close to the best in 18 months. The gains were largely due to optimism that a Brexit deal would be announced at any moment.
The positivity was not to last however. Friday’s GDP numbers didn’t excite market very much, and after we had closed, Boris Johnson’s brother (a remainer) quit the government in protest at the proposed deal. If more remain supporting MP’s follow suit, then a deal becomes less likely and the Pound would drop. However at the time of writing the Pound has recovered part of Friday’s losses.
The next 48 hours will be very interesting for the Brexit and the Pound, as outlined in a good article in the Times earlier today. What the last few days show, is it’s not just the conservative party that need to agree a deal. The EU must also agree to it, and there are a few sticking points that are hindering them doing so.
What would happen to the Pound if a Brexit deal is agreed?
Assuming both sides do agree something in the next few days, it then has to be voted through parliament. Labour have already said they would vote against any deal that doesn’t give ‘the exact same benefits’ of remaining in the EU, which is frankly preposterous. So, it will depend on whether May can ensure the Conservative party along with the DUP, voting through the deal.
If all of this happens, then I think the Pound will strengthen significantly.
What would happen if a Brexit deal is not agreed?
As you can see, there are several hurdles to overcome. If a deal cannot make it over these hurdles, then we’re in unknown territory. What happens if a deal is not ratified by parliament? Will the EU agree to the proposed deal? Will there be a leadership challenge? Will there be a general election? Will May survive? Will the whole Brexit process need to be extended?
As you can see this would open a Pandora’s box of uncertainty. Markets hate uncertainty, and if a deal is not voted through, I think the Pound would fall considerably. Therefore, the next 48 hours are crucial and will largely determine whether the Pound will go up or down.
Make sure your currency requirement is protected
Those with a currency requirement should get in touch with us today to discuss their options. We can help in various ways. Our service does not just involve achieving exceptional rates of exchange, we can also offer many ways to protect against the uncertainty currently causing GBP volatility.
Speak to one of our experts today to discuss your requirements and your options. Don’t just sit back and hope the exchange rate will move in your favour; hope is not a reliable economic tool.