020 7898 0500It is fair to say that the pound has been riding something of a rollercoaster of late. Disappointing economic data has played a part, as well as events in Europe and the US. It’s clear, however, that the major influence is Brexit. When the EU referendum results were released, sterling lost 12 cents against the dollar and it has been up and down ever since. Yesterday provided a chink of light at the end of a long, dark tunnel, with Barnier saying that the EU was prepared to offer the UK an unprecedented deal.
This will certainly ease fears of a no-deal Brexit and there is much to be positive about regarding our future relationship with the EU. However, without pouring cold water on the whole thing, nothing is agreed until everything is agreed, so it wouldn’t be at all surprising if another curveball came in the near future. Until an agreement is reached, we can expect further sterling volatility. The good news is that if we do reach a deal, it is reasonable to expect some significant sterling strength.
The chart below shows the movements between sterling and the euro over the last month. As you can see, we are experiencing some real sterling volatility at present.
