Pound/Dollar exchange rates have seen somewhat of a rally in the last few weeks with the pound having rallied just under 4% since mid February. This has pushed sterling to its highest level against the greenback since June 2018.
This has been a significant run for the pound a trend that I believe could well continue throughout the course of the year. This bodes well for anyone buying US dollars but should you need to sell dollars then this trend should be concerning. Progress with Brexit along with reduced optimism from the Federal Reserve regarding future US growth and a more hawkish stance to interest rates and we could begin to see continued US dollar losses.
Is a ‘no deal’ off the cards?
A rally for the pound has come following developments with Brexit which appears that a scenario of a ‘no deal’ Brexit is becoming increasingly more unlikely, although not totally off the cards. Today MP’s will head to Parliament to vote one further amendments. Speaker John Bercow makes the final call on which amendments are put to a vote, and we won’t know which ones he has chosen until later on Wednesday. Voting is likely to take place around 19:00 GMT
Other key dates for the diary are clearly explained in the below graphic courtesy of a very in depth article on the BBC website
As you can see there is still someway to go and the overriding consensus is that PM Theresa May’s deal will not get through. In my view the most likely outcome will be an extension of Article 50 by 3-6 months. In all cases I would expect the pound to gain traction, and if her vote was to be passed, then I would expect a strong surge for sterling. I don’t think this will happen so I would expect the markets to settle down in the short term.
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