Sterling has weakened by around 1.5% against USD and EUR in the past 24 hours as the UK and EU prepare for a final showdown in the Brexit saga.
We expect an extremely busy couple of days as clients seek to lock in today’s rate for the year ahead before it falls any further. The fact remains that sterling could go either way and the recent fall is indecisive. The general feeling on the markets still seems to be that a deal is more likely than not.
Today, EU leaders and the British Prime Minister will hold a conference call. Boris Johnson has promised to walk away from talks if no deal appears in sight before 15 October (tomorrow), which presumably means on the result of that call. That news could come at any time.
Then on Thursday and Friday EU leaders meet to discuss what concessions they might make to get a deal across the line.
As I mentioned on Monday, falls in sterling over the past year have tended to be sharper and deeper than rises, so this could be a bumpy week. On the other hand, the proverbial can could be kicked down the road a little further, with negotiations continuing into November.
If you have a crucial transaction in the offing, speak to your trader as early as possible on 020 8108 5337 if you need to lock in your rate.
