The Pound, perhaps surprisingly, is holding up fairly well against other currencies such as the Euro, despite current affairs suggesting this should not be the case. Currently the GBP/EUR rate is at 1.1235 and Sterling remains robust in the face of some significant political uncertainty. Today’s post will look at what has happened this week, how it has affected the Pound, and ways to avoid adverse exchange rate movements.
Theresa May faces multiple commons defeats
Yesterday May had a very bad day in the office. Later this morning the full legal advice on Brexit will be released, and the rumours are that it contains some strong wording about the backstop. If this wording deviates significantly from what has already been released, then it won’t bode well for her.
Why hasn’t the Pound fallen?
Perhaps more importantly, there was an amendment yesterday by a Conservative MP that means that if the deal is voted down next week, which seems almost certain, then Parliament may well be able to wrestle control of the Brexit process from the government. If the vote is lost, they would be able to amend any back up plan and bring it back to parliament 3 weeks later.
There were also developments from the EU, with the ECJ saying that the UK could revoke article 50, and this coupled with the amendment mentioned above, means that a ‘no deal’ brexit is much much less likely.
The is why the Pound remains supported, when you would probably have expected it to drop sharply. Things are very uncertain of course, and by this time next week who knows where the Pound could be. Despite the fact there’s now less chance of ‘no deal’, it remains the only legal course of action other than agreeing to May’s deal. Despite the media noise, I can’t see another referendum. What would the question be? Would it split the leave vote? What if it was close again, a 3rd referendum.
All this uncertainty means Sterling is unlikely to rise any time soon. 2.5 years after the referendum, and the politicians are still arguing about what type of Brexit should be pursued. What says it all is the fact that May and Corbyn couldn’t even agree on what TV channel to debate the issue on!
Worried about exchange rates?
Nobody knows what the next couple of weeks will mean for the Pound, but what we do know is that we’re likely to see some significant volatility in the currency markets. If you need to make a currency transfer, then you should get in touch with us today to discuss how we can help you get the best exhcange rates.
We also offer access to our online trading platform that allows you to see our actual trading levels so you can compare what we can offer you 24/7.