- GBPEUR have not recovered fully from flash crash in Asian markets
- UK-IE deal to secure borders post-Brexit
- Parliament split over Brexit strategy
- Further downfalls likely
Sterling stalls at 1.11 against the Euro
Following the flash crash in the Asian markets late last week, Sterling has been unable to make any recovery attempts against the Euro and remains vulnerable around the 1.11 range.
Further talks regarding the future of the UK post-Brexit continue to surface and will likely remain the driving factor behind Sterling exchange rates in the weeks ahead.
Border controls between the UK and Ireland have also featured this week, which looks to limit immigration once the UK leaves the European Union following Article 50. Parliament remain split over the direction of the UK with Ed Miliband – the previous Labour leader throwing his support behind a second vote on the terms of Brexit.
Theresa May has been heavily criticised for putting border controls before post-Brexit trade deals, which is dampening business confidence and threatens the UK’s status as the the financial hub of the world. UBS predicted that Sterling to Euro exchange rates would hit parity and given Theresa May’s stance towards Brexit, these exchange rates are looking more likely to materialise in the weeks ahead.
Airport rates are already offering exchange rates close to parity, so how long will it be before inter-bank rates follow suit?
Brexit outlook likely to impact economic data
The Pound’s value is being driven by sentiment and further negative news for the UK economy could have harsh consequences for Sterling. Fortunately the UK is cushioned by a lack of economic data this week which may limit further downfalls in the very short term.
However the impact of a hard Brexit and the potential ramifications it could bring could hurt Sterling as we approach November with the deadline for Article 50 shortening. I am expecting Sterling to lose further ground against the Euro with parity a possibility unless the new Government provide reassurance for business.
If you have a requirement for Euros in the very near future, this could be your best opportunity before rates take a further hit.