The pound has endured another week of uncertainty but has performed well against the majors, continuing to benefit from an underlying expectation a no-deal Brexit will be avoided and from continued positive sentiments over a COVID-19 vaccine.
Whilst Brexit is still far from dealt with, the potential for a deal to be struck has supported the pound in recent weeks with the historical performance of the pound ringing true, where signs of a trade deal or progress equate to a stronger pound, whilst signs of no-deal seem to imply a weaker pound.
The talks did look to be in trouble when we saw news that members of the EU negotiating team were self-isolating because of coronavirus, not an ideal situation given the importance of the discussions.
The pound did falter briefly on this news but regained some confidence going into the weekend with GBPEUR interbank rates over 1.12 once again, and GBPUSD just shy of 1.33 at 1.3296.
We have been saying for weeks that we are about to enter a crucial phase on the talks, that time really feels to have come and passed and with just literally weeks to the end of the year and the end of the transitional phase, the passage of time could be the biggest influence on the talks.
Sooner or later one side has to capitulate, or that immovable force of time will ensure we get the answer the market craves, whatever that might be. Despite the general wisdom supporting a stronger pound on new of a deal, there are growing voices suggesting a deal is not the be all and end all for sterling, with a plethora of other issues for the pound and the UK to confront just as soon as deal is agreed.
Nevertheless, to have some clarity on Brexit by nature provides more certainty and this is a key feature of performance on exchange rates. The next few weeks are looking very interesting as we learn of which direction events will take, the news literally could drop at any moment and keeping up to date and prepared is vital.
How Can I Prepare During Times of Market Volatility?
Unfortunately, just watching the rates and hoping or worrying doesn’t do a huge amount. Luckily to really take advantage of market movements you can look to the service of a specialist to try and help you maximise a position by tracking the news.
We offer a range of option to help capture and secure a favourable level, and can highlight the news, events and situations that might well lead to those improved positions. As discussed, signs of a deal could lead to the pound rising, whilst signs of a no-deal have historically seen the pound weaker.
Preparing yourself for such news according to what you are looking to do is a great way to track and capture the volatility, we work very hard for our clients to keep them updated on the latest news.
From Monday the 23rd November, it is just 38 days to the 31st December when the deadline for the current transitional phase expires. Given we have Christmas and also other Bank Holidays in that period, there is actually less than this time to work a plan, even less when you factor in weekends.
Brexit has been the defining factor of the last few years for the pound, causing volatility back in 2015, a year ahead of the vote. Whether you like it or not, this topic looks set to define the rest of 2020 as we await the latest news with it appearing we are getting closer and closer to a crunch point that might finally see some important movements.
Coronavirus has made the currency markets even more unpredictable and volatile in many respects, and we can help share with you the latest news and provide tools to help provide you make an informed decision and strategy on your transfer.
If you have a transfer to consider before the end of 2020 and wish to get some updates on the market and some proactive assistance with the timing and planning of any trades, please don’t hesitate to reach out for more of a discussion from our expert team.
I would like to assure all our readers we remain very much operational to assist with any international money transfers throughout this time. If you would like to discuss the markets in more detail, please do contact me directly using the form below.