There continues to be high levels of volatility on GBP/EUR exchange rates as Brexit talks intensify. The Irish border remains the key point of contention; should we see a deal come to fruition we could see significant sterling strength. The original date to have a deal agreed was 17th October, but it now may go to an emergency summit in mid-November. However, the final agreement may still not happen then, considering how many extensions have happened so far.
Is Theresa May’s position in doubt?
There is concern for Theresa May’s position with numerous Conservative Party members questioning her ability to get a Brexit deal in place, and the deal that she is willing to accept. I question their motives; during the most important negotiations involving the UK in the last fifty years I think the PM should be supported rather than Party members throwing a spanner in the works at every corner. I sense that the vast majority of her opposition are merely looking to make advances in their own career.
It is rumoured that there are currently 46 Conservative Party members willing to put forward a vote of no confidence, with 48 required for a leadership challenge.
I am not convinced. If a leadership challenge was to take place it is not likely the candidate would win a majority victory, and if that was the case we could be looking at a general election and the potential risk of Labour gaining control, I think the risk may not warrant the reward.
This would be terrible for the pound. Political and economic uncertainty during Brexit talks would cause a heavy fall in sterling value.
If you are purchasing euros it may be advisable to move in tranches. I believe a Brexit deal will be agreed, but it may come at the eleventh hour and we can expect further sterling weakness in the build up. I would consider performing 20-30% of my trade at current levels and hang fire in the hope of a deal for the remainder, of course this is dependent on your time scale.
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