The pound to euro rate is trading on the interbank rate at 1.1579, very close to some of the best rates for buying euros with pounds since May of this year.
Parliamentary drama as Letwin amendment passes
When the Asian markets begin trading shortly, we could see increased volatility as the currency market struggles to digest the developments this weekend. The developments include the passing of the Letwin amendment, which seeks to ensure Boris Johnson’s Withdrawal Bill has received parliamentary approval by the Lords before it is passed into law.
This has meant that Boris had to request the extension from the EU, as per the Benn Act. Boris has requested the extension via the letter, but has also sent another letter saying he wishes for it not to be followed.
This has put increased pressure on the outlook on Brexit as before the weekend it appeared the options were for Boris’ deal to be passed or not, resulting in a binary outcome that we would be leaving the EU or not.
How will the currency markets react?
This amendment has the potential to influence the pound and euro rates, by providing an alternative consideration for the market. Generally speaking, the pound has risen on signs of an extension or deal being reached as it makes no-deal less likely.
No-deal is a concern for markets because it is difficult to quantify what it will result in economically for the UK. Signs of no-deal being postponed may see the pound rising therefore.
Dominic Raab, the UK’s Foreign Secretary has been quoted today saying he believes Boris has a chance to get the deal through parliament this week.
Markets look set to have plenty to digest as we get ever closer to the final 31st October deadline a week on Thursday.
If you have a transfer to consider and wish to get an update on rates and strategy to potentially help maximise the value of your currency exchange, feel free to contact me, Jonathan Watson, to discuss further.