Sterling’s recent run seems to have slowed this week, with the Pound struggling to make any further inroads against the EUR and some of the other major currencies.
GBP/EUR rates have fallen away from the 8 month high seen last week, following a leaked Government report, which indicated that the UK will be worse off after Brexit. The report covered all three Brexit scenarios, including a free trade agreement, access to the single market, or the worst case scenario of no deal being reached at all.
The Government were quick to react and said the findings were only a preliminary assessment but the news is hardly likely to inspire confidence amongst investors. As such the Pound quickly fell back below 1.14 against the EUR, although maybe somewhat surprisingly has made further inroads against the USD this morning.
GBP/USD rates moved back above 1.42 after initially falling yesterday. Despite the greenback finding some market support around this level, it seems as through investors have started to pull funds away from the USD, which has struggled to make any significant impact against the Pound since the turn of the year.
Despite this seemingly positive spike, the Pound could come under further pressure over the coming days as Brexit talks starting to dominate the headlines once more.
With phase two talks not under way and trade discussions starting in March, it is a key point in the transition.
The EU have already outlined their position and it did make for positive reading for those driving the UK’s negotiations and with Brexit secretary David Davis already claiming the UK would be opposing many of the suggestions put forward.
The uncertainty of the outcome is likely to put further pressure on the Pound over the coming weeks and beyond and as such, I would be looking to protect any short to medium-term GBP currency positions if feasible.
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