Sterling’s impressive run from the end of last week has come to an abrupt holt during today’s trading, with the Pound falling by well over a cent against the Euro.
GBP/EUR hit a low of 1.1070 and despite the Pound finding support around this level, it remained marooned under 1.11 by the close of European trading.
The Pound shot up towards the latter part of last week following reports that the EU were on the verge of offering the UK a Brexit deal, which would be unique and like no other current agreement the EU has with any other country. This immediately caused a surge in support for the Pound, which saw its value steadily increase against the EUR throughout Thursday’s trading.
This positive feeling carried into Friday despite the EU’s chief negotiator Michel Barnier indicating that all options were still on the table, with the Pound finishing the week strongly.
This was not the first time that the Pound had threatened a recovery only to leave those clients holding Sterling disappointed and once again, this scenario seems to be repeating itself.
Reports this morning indicated that UK Prime Minister Theresa May’s Brexit plan was hanging by a thread, as Tory rebels aim to scupper her Chequers proposal. This report was compounded by a BBC article given by former Foreign Secretary Boris Johnson, who slammed May’s plan, claiming it leaves the UK with “diddly squat”. This view was echoed by the UK’s former Brexit negotiator David Davis, who also claimed he would be voting against May’s proposed plan.
It certainly seems like an orchestrated attack by the two former key members of May’s backroom team and has once again heaped pressure on the UK and its Brexit strategy, causing the Pound’s value to decrease as a result.
The back and forth nature of the media’s reporting on Breixt, is one of the key drivers of Sterling’s value over the past few months in my opinion and where we head next is anybody’s guess.
Those clients who have the option to protect their currency positions moving forward, should consider this option and remove the growing uncertainty and risk from the market. Feel free to get in touch directly to discuss how the above factors could impact your exchange rate using email@example.com.