Following the leaked Brexit memo yesterday, which detailed the lacking plan from the new Government, Pound Sterling fell a cent against the Euro and US Dollar. But as the news unfolds the leaked memo was in fact a fake according to Government officials.
As a result, the Pound has recouped all of its losses at the start of this morning’s trading session, trading against the Euro at a 2-month high. There has been further developments this morning that could bode well for Pound Sterling exchange rates.
Angela Merkel to compromise over free movement
The German Chancellor has signalled that some maneuvering over free movement could be discussed with the UK, despite previously outlining that Brexit negotiations could not infringe on the 4 EU principals. The move has been viewed as positive for the Pound as it could show early signs of the EU backtracking, however her comments come at a time when the European elections are due which could be a tactical move from the German Chancellor.
With the likes of Brexit and Donald Trump, EU officials are becoming increasingly concerned about the new wave of right-wing parties sweeping across the globe. A curb on immigration could prevent further right-wing parties from entering political power and disrupting future plans for the bloc.
Nigel Farage to return to politics?
The former UKIP leader has hinted at rejoining the conservative party to shadow any Brexit discussions, as sources have suggested he will meet with Theresa May following discussions with the new President elect.
Whilst May has previously rejected his relationship with Trump as irrelevant, its becoming increasingly clear that Trump views Farage as a close ally.
There is a strong argument that Farage could be an ideal go-to MP for UK-US relationships, at an important time in British history following the Brexit vote. If Farage is able to secure new trade deals with the US, the UK could find itself in a better negotiating position with the rest of the World.
At this stage the Pound could find further support as some of these stories unfold, but as it stands buying Euro’s is now significantly cheaper than prior to the US election result. With so much uncertainty ahead it may be prudent to buy whilst the UK has the upper hand.