Good morning. In today’s post I’ll take a look at the week ahead and events that could affect Sterling exchange rates. The most important news will likely to be any developments with Brexit, although economic data will still have an impact. Let’s first take a look at what could happen to the Pound with regards to Brexit, before moving on to the scheduled economic data releases.
Brexit deadline this week, what could happen to Sterling?
Last week Sterling fell in value as markets were concerned that with less than a week to go, there is still no resolution to the current deadlock. As MP’s continued to bicker about what kind of Brexit deal they want, we now have less than 5 days before the UK crashes out with ‘No Deal’. This scenario is still unlikely, but remains an outside possibility. This Friday is the deadline, and parliament need to agree a way forwards before this weeks EU summit, and pass the withdrawal agreement. If this happens, the Pound is likely to rise in value by up to 3%.
What happens if no deal is agreed, and how could this affect the Pound?
If no deal can be agreed, then there are 2 options left. Leaving with no deal is still the current legal default, and if this starts to look likely, then Sterling would plummet in value by up to 5%. However this is still unlikely, as if no agreement can be made then we think that the UK will request a long extension to the Article 50 process to avoid a No Deal scenario. If this were to happen, it’s hard to know what effect it would have on the Pound. It could weaken Sterling due to the extended uncertainty it would generate. On the other hand, the fact that it avoids No Deal and would push the UK towards a so called ‘softer Brexit’, could lend some support to the Pound, helping to keep rates from dropping too much.
So after nearly 3 years of negotiations, this week is a very important one for how things move forwards. In addition to Brexit developments, there are also a raft of economic data releases that will also affect the currency markets. These are outlined below. If you have a currency requirement and would like to discuss the market with an expert, or just get a quote to see what exchange rate we can offer you, contact us today.
Economic Data releases that could affect exchange rates
Monday 8th April – There is little on the calendar today to affect the currency markets. Sterling will be moved by any signs of a deal on Brexit. We have already had some better than expected Germany Trade Balance figures that has strengthened the Euro a little. This afternoon at 2pm the USA releases Factory Order numbers that could move GBP/USD.
Tuesday 9th April – The only UK data of note is Retail Sales numbers from the BRC, although it is a minor reading and as such, unlikely to have much of an impact on the value of Sterling. Elsewhere, Australia releases Home Loans and Investment lending figures. There is also a speech by a FED member that could affect the US Dollar.
Wednesday 10th April – Things start getting a little busier today, with 3 key releases from the UK: Industrial Production, Manufacturing production, and the latest HDP numbers. Markets expect flat growth for all 3 readings, so any positive figures should help the Pound gain. The ECB have an interest rate decision, but we expect rates to be left on hold. The policy statement that follows could generate some Euro volatility. The European Council summit on Brexit also starts today which is the main event of the week. Over in the USA we have inflation numbers, a monthly Budget statement, and the FOMC minutes, all of which could affect GBP/USD rates.
Thursday 11th April – The main news today comes from the USA in the form of Jobless Claims, and speeches by key FED members that could influence future interest rate movements. Australia also has a speech by a central bank member and inflation figures. New Zealand has Business PMI and Retail Sales figures.
Friday 12th April – Brexit day. This is the deadline for the UK to agree a deal to leave the EU. If a deal is agreed then the Pound is likely to strengthen. If the UK leaves with no deal, expect Sterling to plummet in value. We also have EU industrial production figures and a consumer sentiment measure from the USA.
Speak to an expert about your currency requirement
If you need to transfer a large volume of currency, get in touch today to speak to an expert currency broker. We can explain what is moving the rate, give you our view on which way rates are headed, and provide you with a quotation to compare with your bank or existing broker. Our rates are up to 5% better than your bank or existing broker may offer, potentially saving you thousands of Pounds.