Sterling Exchange Rates: Will the U.K Agree a Brexit Deal?

Pound to Canadian Dollar forecast Brexit remains in Limbo

We have seen a fairly flat few weeks for Sterling exchange rates as the ongoing saga of Brexit negotiations with the EU continues to rumble along, currently with no agreement appearing to be forthcoming.

Currently the U.K Prime Minister Boris Johnson has appeared to turn the screw on EU Chief Negotiator Michel Barnier effectively saying he will only reopen talks with the EU if there is a “fundamental change of approach”.

You may have thought that this would have hit the pound fairly badly as it is one large step closer to a no deal Brexit, however the fact that the EU response appears to be still one that wants to get something done seems to be keeping the pound in reasonable shape, and it does feel that although it is by no means a certainty the markets do feel that there is a fair chance a Brexit deal may be done.

Without going into the finer details of fisheries and all of the other factors that may be holding a deal back the main focus is that in this current climate, in the midst of a global pandemic it does appear that both sides almost need to get a deal done as further economic uncertainty would be not be welcomed by either the U.K or EU for 2021.

However, the deal must be right and there is still a lot to agree and concessions do need to be made on both sides before this can happen. Talks appear to be ongoing daily now and although we can only really go off of what we hear in media reports it does still seem like these talks have far from broken down.

What happens to the Pound Should the UK and EU Get a Deal Agreed in Principle?

Should there be an announcement of a breakthrough in talks and positive news regarding a deal happening then I would expect Sterling exchange rates to have a boost, this not be the huge surge that some feel may happen straight away as there will still be things to iron out before a deal is official and will actually happen, however you would be surprised to not see Sterling exchange rates have a good run of form, mainly due to the uncertainty of a no deal Brexit being lifted.

What Happens if Talks Officially Break Down and no Deal Becomes an Almost Certainty?

This could be seen as a big negative for the value of the pound, for those that have been reading our reports for a number of years now you will know that a no deal Brexit, or even a heightened chance of a no deal Brexit has tended to lead to the pound losing value due to the uncertainty that a no deal Brexit brings.

As mentioned earlier in the report this is a situation that the U.K could do without, however it is by no means a certainty that they would fold and make large concessions just to avoid it, so a no deal at this stage can certainly not be ruled out.

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 lock in currency 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, we will be happy to discuss your specific situation with you.