The pound has seen a narrow trading range against the Euro this week as focus centres on the EU summit in Salzburg. The second part of the meeting takes place today and the markets are looking for any signs that progress is being made on moving closer to a deal between Britain and the EU. For the moment there is a stalemate on the Irish border conundrum with the EU asking for more compromises from the UK. Prime Minister Theresa May has made clear that it is now the EU’s turn to compromise and until there is movement the pound is unlikely to move much higher. GBP EUR rates are currently sitting at 1.1270 and some positive news could see a break over 1.13 for the pair.
There are also significant forces trying to trip up the Brexit process and there are now growing calls for a second Brexit referendum from within the EU and some political groups in the UK, adding an additional layer of uncertainty for the UK and the pound. The Prime Minister has been clear that his will never happen under this Government. It does of course now mean that the risk of a no deal scenario does remain high which could keep the pressure on the price of sterling in these coming weeks.
Whilst there is optimism about reaching a deal, the no deal scenario cannot be ruled out. The BBC1 Panorama special this week highlighted how difficult it is for the Prime Minister to find a deal which will be accepted by the EU but also one that she will be able to get through in parliament. There are fifty or so politicians who have said they will vote down Chequers in its current form which again suggests there is a relatively high chance of no deal.
Despite a higher inflation reading for the UK yesterday which pushed the price of sterling higher, the rally was short lived after Theresa May made clear that she rejected Michel Barnier’s plans on the Irish border. The EU remains insistent on a back stop that would effectively place the border down the Irish sea separating the UK from Northern Ireland.
There will be another two months of political wrangling, and with this will come opportunities which will often prove short lived as both sides push for a good deal. To try and make the most of any opportunities when they come about then please get in touch with me and I will be happy to assist. Use the form below to ask for more information and I will contact you personally.