The Pound shot up this afternoon following reported rumours breaking that the UK and EU negotiating teams are close to agreeing a transition deal after the Brexit deadline. Robin Walker who is a junior minister said that Britain is very close to reaching a deal with the EU.
After the last few months there is hopefully going to be some news in the next few weeks, with the EU Summit set to take place at the end of March. The Summit has always been hallmarked as the point in which a deal was going to be hopefully agreed and the jump today certainly shows the market is waiting for any news of Brexit progress.
In the next few weeks Sterling could break out of the current lull after last week was the Pound’s least volatile week for 2 years. There is currently total focus on the Brexit talks which were proven last week after there was poor UK data released for Sterling but the exchange rate still rose. This suggests that whatever decision or deal that gets made in the next few weeks could completely dictate market movements.
If the rate was to rise up to the 1.15 level then there could be optimism of a movement more towards the 1.18 at the end of the year. Barclays previously suggested they thought the rate might get very close to 1.20 however without positive Brexit talks and a clear agreement for the UK’s transition out the EU this currently seems unlikely.
In the next few weeks before the end of March I will be surprised to see any major movements with the market poised in anticipation. In my opinion if you’re looking to buy Sterling then the lows of the last few months may not be on the cards for too much longer. Completing any transfers in the next week or say may be important to avoid missing out on the low teens.