Boris Johnson’s cabinet is now assembled and, true to his word, he is pushing ahead with trying to deliver Brexit by the 31st October, come what may.
Not that the markets necessarily expected otherwise, as his rhetoric had been clear enough during his leadership campaign, but with senior ministers of his team now stating that they are “working on the assumption” of a Hard Brexit, the pound has lost any love it had from investors in the short term.
It fell over 1% against a major raft of currencies yesterday with further selling seen overnight in the Asian session to a 28 month low against the US Dollar (1.2119) and near 24 month low against the Euro (1.0880) as the twice extended deadline of 31st October turns into a realistic Halloween nightmare for Sterling. This morning starts in similar fashion as the pound struggles to show signs of recovery.
Uncertain times lie ahead for businesses in or dealing with the UK economy.
Looking at this week; economic data from the UK is headlined by The Bank of England MPC interest rate meeting on Thursday. Given the timing, they are likely to keep their powder dry but as we saw with their reaction to cut rates post the 2016 referendum, action to from Mark Carney cannot be ruled out – watch out for any accommodating comments after the rate announcement.
In the short term, further moves in the pound are likely to be driven by comments from Boris or Brussels and so it looks like being a key week for the pound as it has broken out of its recent trading range, this could open up further technical moves lower in the coming sessions.
If you are an importer, then these moves will be a concern. Yet there are opportunities for exporters in the UK to secure rates at unprecedented levels.
If you are unsure about the best way to protect your business from the recent fall in the pound or want to secure these favourable rates if you export, XE can provide you with assurance and certainty during this period of instability with our experts to guide you through however Brexit turns out, and beyond.
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