Brexit trade talks continue to be one of the main drivers for sterling exchange rates in the coming weeks, with the deal or no deal saga pressing on for yet another week with so far very little news of note.
Expectations are still there that it is likely a deal will be done, however for those looking to carry out a large exchange there should still be extreme caution on relying on one, as although that could mean the pound has a good solid boost in value, talks falling through again at this very late stage in the day could actually lead to significant weakness for the pound.
The discussions are set to go on over the course of the week and I would expect that we should hear some news on whether or not some middle ground has been achieved, this could lead to a volatile end to the week for the pound.
Pandemic Causes Fears Around Financial Markets Within Europe and the US
Yesterday both the U.K and France posted the most amount of COVID-19 related deaths since May and April respectively and both Italy and Greece also had their record number of daily cases as the pandemic continued to take a very tight grip on Europe, causing a sell off on the stock markets and further uncertainty as to what may happen next with economies across both Europe and the rest of the world.
In the U.S the number of people hospitalised has risen by at least 10% in 32 states, which suggests that whoever wins the election over there next week will have a really tough challenge on their hands, both with dealing with the pandemic and then trying to negotiate the way out of a long and painful economic hangover that comes from it.
French President Macron is expected to make a televised address later today and at a minimum the expectation is for much tighter restrictions, possibly even with a new style of national lockdown.
This news and the general concerns about the spread and disruption currently being witnessed across the Eurozone has led to weakness for Euro exchange rates and the pound to euro interbank exchange rate as of this morning has been closing in on the 1.11 mark, a rate which the pairing has struggled to breach and stay above for almost two months now.
ECB Interest Rate Decision and Press Conference Tomorrow
Tomorrow lunchtime will be key for those looking to buy or sell euros with the pound as we have the European Central Bank (ECB) interest rate decision and press conference due out at 12:45 and 13:30 respectively and this could be an important one for euro exchange rates.
The Eurozone currently is experiencing weak growth, negative rates and sub-zero inflation which is leaving policymakers running out of options and spiraling the Eurozone into a number of problems. It may be that the ECB do not act on this weeks meeting however investors and speculators will be hanging off of every word spoken by Cristine Lagarde in the press conference after, searching for clues as to what their next move may well be.
With rates moving by the second it is key that you are ready for action during this process conference as we could see a fair amount of volatility before, during and after.
U.S Election Enters Final Stages
As if there was not enough for the markets to feed off of, we also have the small matter of the election over in the U.S which is due to take place next week.
Currently the bookmakers have Biden as clear favourite to win, but that does not mean that this will be the end result, as we have seen many times before over the past few years, the odds and the polls can be significantly wrong.
Either way I would expect the election in the states may have the ability to cause significant volatility not only for the Dollar but for all major currencies as it will impact global attitude to risk.
What Should I do if I Have a Currency Exchange Coming Up?
If you have a large currency exchange coming up either for you or your business, then a lot really depends on your individual situation and your approach to risk, as we could be in for a fairly volatile few weeks and months depending on the outcomes of the above.
There are options available, you can confirm an exchange rate for your currency exchange in advance, you can set official market orders to buy or sell at a specific rate or you can hedge your risk and split your requirement into various chunks.
Whatever your plans it really is key to have a proactive and efficient currency broker on your side and this is where we can step in and help. Not only can we act as your eyes and ears on the market but we can get in touch the second an opportunity arises, this can prove invaluable in circumstances and market like this.
Feel free to get in touch with us by filling in the form below and we will be happy to discuss your specific situation with you personally.