GBP/USD rates expected to be volatile in lead up to Brexit deadline
The pound to US dollar exchange rate should expect volatility throughout the month of October as the Brexit negotiations draw to a close. On the 17th and 18th October UK Prime Minister Boris Johnson will meet the leaders of the other 27 countries in the bloc, to thrash out the final deal.
The EU to date has made it clear that Boris Johnson’s plans which will remove the Irish backstop were unacceptable. The Irish backstop is an insurance policy that prevents a hard border between Northern Ireland and Ireland. A positive for the Prime Minister is that Arlene Foster, the leader of the DUP has changed her tune in regards to the rules Northern Ireland will take, however the specifics are yet to be released.
The general feel on the currency markets over the last 12 months is that a deal will see the pound rise in value, where as a crash out Brexit will cause the pound to fall against the US dollar.
Extension legislation: Will Boris Johnson ask for Brexit extension?
Its important to understand that legislation has been passed which means Boris Johnson should seek an extension to Article50 if a deal cannot be thrashed out at the summit, however Boris has labelled this piece of legislation as a ‘surrender act’ and continues to state the UK will leave the EU without a deal on the 31st October.
If you are buying or selling US dollars in the weeks and months to come, the Brexit story has the potential to cause major currency fluctuations, therefore if you are budgeting on current levels and it essential that you achieve these levels, contracts are available that can protect your position. For more information feel free to fill in the form below.
In other news the US dollar could face more than normal volatility this month as the US election will be in full swing. US election security is still a major talking point in the media, however this appears to be being overshadowed at the moment by the Presidents impeachment. A whistleblower announced that Trump tried to get the Ukraine to interfere in the election and the Whitehouse tried to cover it. President Trump has stated that it would start a civil war if he was impeached. For more information on the election and how the impeachment could impact exchange rates, feel free to fill in the form below.