The pound remains incredibly volatile this week as no breakthrough in the Brexit negotiations has yet been made to conclude the first round. Talks are continuing behind the scenes but the stalemate has arisen due to the Democratic Unionist Party which is unwilling to accept an offer that could distance the United Kingdom away from Northern Ireland.
The DUP do not want to see a border in the Irish Sea whilst there are also concerns the Irish government seek to use Brexit as a mechanism to push for a united Ireland. Whilst the mood has generally been optimistic there is still a very real risk of a no deal outcome and this is keeping pressure on sterling exchange rates across the board.
I remain optimistic that a deal will be hammered out before the EU summit next week 14th & 15th December and the pound is likely to see a quick rally if sufficient progress is made. Those clients looking to sell Euros to buy pounds would be wise to consider moving sooner rather than later to avoid potential disappointment. EUR GBP could be a big loser in the short term on the back of a deal.
The opening of the door for a future trade agreement between Britain and the EU would almost certainly be good news for the UK although it must be membered that this process will be a long one ahead of march 2019 and any gains are likely to be limited whilst the uncertainty over Brexit remains.
House price data from the Halifax is released tomorrow morning which could see a shift in the numbers. Reports of a drop in house prices by as much as 20% in the London market could soon start finding their way into the official figures and there could be a negative reaction although this may not materialise until the New Year. The NIESR GDP estimate is released on Friday and is considered an excellent precursor to the official data. Anything positive here could see the pound rally although the big market mover will almost certainly come from Brexit deal or no deal outcome!
To discuss how these major events are having a direct impact on sterling exchange rates and your specific currency requirement then please feel free to get in touch with me James at firstname.lastname@example.org