Sterling Rates ahead of the Key Brexit Vote next Week!

GBP EUR Slides as Political Tensions on Brexit Escalate

The pound is seeing considerable uncertainty this week ahead of the key vote next week in the House of Commons on the Brexit withdrawal bill. The debate commences next Tuesday and will last for two long days before the vote on Wednesday evening. This has the potential to be a major market mover for sterling exchange rates and clients with pending requirements would be wise to get in touch to plan around this event. In my view this is the event of the week for anyone with a currency requirement.

Trading prices have been choppy after much uncertainty over the agreement reached yesterday between Brexit secretary David Davis and Prime Minster Theresa May. An official Brexit backstop date has now been included in the text for leaving the EU as to when the Britain must leave the Customs Union and this is starting to shape the direction of Brexit. A white paper is also expected soon and these kind of developments are likely to see a major reaction for the pound. Clients looking to buy pounds or sell pounds should be aware of the implications from all of these developments which are likely to be the biggest drivers for market volatility.

The bottom line is that if there is any kind of political upset then the pound is likely to come under renewed and sharp pressure. If for example UK prime Minister Theresa May is defeated a number of times on these 15 amendments which have been put forward by the Lords then this could potentially result in a vote of no confidence in the Prime Minister, something the Labour Party are actively plotting. The risk of a general election at this crucial time in the midst of the Brexit negotiation could spell trouble for sterling exchange rates.

GBP EUR is sitting just below 1.14 and close to the highs seen in recent months despite the slight slowdown in the economy and postponement of the next interest rate increase. Clients would be wise to consider taking advantage of the better levels currently available to avoid any sudden drop in the rates. There is a flip side to all of this and that is if the prime Minister can win all the votes possibly by conceding a few and come out unscathed then this could prove to be beneficial for her leadership and hence the pound.

For assistance in making transfers and for guidance on the timing of an exchange then please get in touch with me at jll@currencies.co.uk and I will be happy to assist and give you my views on the markets.