Sterling has moved to a 3 month high against the EUR, hitting 1.1463 at this morning’s high.
This positive spike is being facilitated by a potential breakthrough in Brexit negotiations, with numerous reports citing a prospective agreement over the Irish border. This, as our regular readers will know, was one of the most contentious issues in the on-going talks between the UK and the EU.
This particular red herring had the potential to completely destabilise talks and as UK Prime Minister Theresa May pointed out in a speech a couple of weeks ago, could ultimately be the reason a post-Brexit deal with the EU was not reached.
If there has been some positive developments over this key issue, we could potentially see the pound gain further value against the euro over the coming days.
Despite the current wave of positivity, we must remember this is not the first time we have heard reports of a breakthrough in discussions, only to be left disappointed. Whilst it does seem that the current spike carries with it more substance than the previous false dawns, until we get an official report confirming a post-Brexit agreement has been reached, I will remain cautiously optimistic.
Pound exchange rates up against many of the major currencies
It is not just the euro that Sterling found support against this week. GBP/USD rates continue to hold firm above 1.30, whist GBP/AUD rates are trading around 2 year high.
With the commodity based currencies, such as the AUD, NZD & CAD struggling, due to rising global tensions, those clients holding GBP have been given a window of opportunity to trade at some of the best levels in recent years.
Whether we see further advancement against this basket of currencies will likely depend on whether there is a further escalation in the current trade standoff between the US and China. Further sanctions by either country could cause investors global risk appetite to shrink, which in turn would put pressure on all of the export driven economies.
For more information on how a positive Brexit update could impact sterling exchange rates, feel free to get in touch using the form below. I’ll be happy to respond personally and discuss your queries.