The pound should be set for a hugely volatile end to the week as the EU summit in Brussels concludes today. With a light day of economic data the central focus is on Brussels. The mood so far has been upbeat with Theresa May receiving a strong round of applause last night from European leaders at a working dinner.
EU President Donald Tusk is expected to make a statement at 10:00 this morning (UK time) followed by Theresa May and this should create some volatility for the pound. If sufficient progress is formally reached then the pound should find support and a move higher should be expected.
I would exercise caution for those clients hoping for a major jump higher for GBP EUR or GBP USD as there is some ambiguity over the terms of a future trade deal. The EU are currently insisting that Britain pays the divorce settlement in full before any trade talks even begin. This controversial aspect does make the prospect of a no deal scenario that much more likely and I expect there will be much more mileage in this issue. With such a thorny issue unresolved the pound is unlikely to make major gains although I would expect a jump towards 1.15 in the coming days if all goes well today. Clients looking to sell Euros may wish to consider taking the risk out of the markets before any major announcements.
Of course the defeat for the Government in the House of Commons on Wednesday creates additional uncertainty for the pound and does not help the government for the purpose of this negotiation. Another key vote on whether the exit date is to be enshrined in UK law could also create some headaches for the government and it will be interesting to see whether the government continues to push the vote through. There is also a chance there may be another vote to reverse the vote the government lost so there is plenty here to keep the markets guessing.
Despite the Bank of England and European Central Bank holding interest rates steady yesterday and the accompanying statements, the markets are very much focused on today’s summit instead.
Those with a pending requirement looking to buy Euros are likely to see an extremely volatile few weeks with these major ongoing events. There are likely to be some excellent opportunities for buyers and sellers depending on these outcomes. To discuss how these events will have a direct impact on your on transfer then please get in touch with me at email@example.com