Sterling Rates Steady after UK Budget

After a very safe budget from Chancellor of the Exchequer Philip Hammond yesterday the pound has seen little in the way of volatility on the back of it. The ongoing uncertainty of Brexit remains the main sticking point however and continues to weigh heavily on sterling exchange rates.

GBP EUR is currently sitting at 1.1255 and the markets now wait for the end of next week for the end of a two week ultimatum set by Michel Barnier for Britain to offer more in the divorce bill to try and break the deadlock and move discussions on to future trade. Rumours are circulating that UK Prime Minster Theresa May will offer €38 billion in the first week of December although where rates for GBP EUR move to will very much depend on how well such an offer is received by the EU.

Will the pound strengthen?

Should trade discussions open then this in my view would be very good for sterling exchange rates and there could be a good shift higher for GBP EUR. The risk for those clients waiting for rates to improve is that is the conversation does not move on to trade then this could see the pound weaken materially across all of the major currencies including the Euro. The prospect of a no deal scenario continues to keep the pound at bay. The problems for the pound is that the negotiations will continue right through up until 2019 which leaves a very long period of uncertainty.

Clients looking to buy or sell Euros should pay close attention to developments surrounding the EU ultimatum for more money and would be wise to get in touch to look at the options available and how to take advantage of the better rates when they become available. Feel free to contact me James at jll@currencies.co.uk

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