It is said that a week is a long time in politics; this is certainly true when we look at the progress of Brexit. The last couple of months have seen some significant changes which have had an impact on the pound.
What does the extended departure deadline mean for the pound?
Having already moved the deadline once, the Prime Minister requested a further extension after failing to get parliament to agree to her proposals and the date is now set for 31st October.
In some ways, this is good news for the pound as the longer the extension, the more time the UK has to negotiate and agree a deal with the EU, avoiding a no-deal scenario.
However, in the meantime the currency market is facing continued uncertainty, and this causes volatility. Fluctuations due to new developments – and even simply rumours of developments – in the Brexit process are likely to occur until the market has a clearer picture of the final outcome.
Have the European Elections made a difference to our currency or the progress of Brexit?
Although the newly-elected MEPs have no direct influence over Brexit, the European Elections did serve as something of a litmus test for the mood of the country.
The challenge is that there was no clear outcome which can indicate a future direction, or what might happen if a General Election or a second referendum were to take place.
The Brexit Party made gains, but leading parties campaigning for the UK to remain in the EU, including the Liberal Democrats, The Green Party and the SNP also made gains.
The biggest losers were the two main parties, who lack a defined stance on Brexit. This means that the electorate is looking for an answer, but they aren’t agreed on what they want that answer to be. What the European elections confirmed, was what the market already suspected; it’s likely to be a rocky road ahead, and there will be no easy solutions.
This means the pound may struggle due to ongoing uncertainty, or fluctuate wildly according to further political developments.
Will the Conservative leadership elections have an impact on sterling?
The most significant recent development in relation to Brexit, is the resignation of Theresa May, which means not only does the Conservative Party need a new leader, but the UK is awaiting a new Prime Minister.
The candidates include a number of leading Brexiteers as well as those seeking to achieve a measure of consensus within parliament. Whoever is ultimately elected, the market is likely to respond to news relating to which candidates are in the lead and what that might mean for the fate of Brexit.
Fluctuations in the value of the pound won’t directly reflect whether the market prefers one candidate over another but it will respond to any news or developments which suggest that there is more certainty on the horizon, which suggests a candidate with wide appeal, a plan and solid credentials on the economic front.
How do I look after my money overseas when Brexit makes the currency market so unpredictable?
The circumstances of Brexit are unprecedented, so that makes the final outcome very difficult to predict. As currency experts, the moneycorp team watch the developments closely and provide guidance based on our understanding of the market. We know that as a general rule, currencies fluctuate less during periods of certainty and are more volatile during moments of political change.
That may not seem like there’s any good news of sterling in the immediate future, but there are ways to manage your currency costs. As currency specialists, moneycorp provide our clients with access to a wealth of currency tools which help our clients manage their currency risk and make payments overseas.
As well as tools to track, target and even fix an exchange rate, our clients can access great rates, make payments with low transfer fees and manage their international payments over the phone from a UK call centre, online and via our mobile app. We’ve teamed up with Savings Champion to make sure that even in an uncertain times, you can make the most of your money overseas.
moneycorp is a trading name of TTT Moneycorp Limited which is authorised by the Financial Conduct Authority under the Payment Service Regulations 2017 (reference number 308919) for the provision of payment services.
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