Sterling starts off where it was last Monday, but this will be an interesting week for the pound, encompassing as it does the 15th of October.
We’ve seen a few “do or die” dates during the Brexit process – 29 March, 31 October, 31 January… – but Thursday marks the end of the meeting of EU leaders at the European Council and the day that Prime Minister Boris Johnson said he would walk away from trade talks if a deal to his satisfaction looks unlikely.
We can expect the pound to move significantly around this point – weakening if no deal or a UK walkout and strengthening if the talks look like succeeding. But history has shown that the exact reverse of expectations can happen, so beware.
Any hopes that the pound will soar upwards as it did after the decisive General Election win last December, however, will probably be misplaced, with the second wave of Covid-19 clearly establishing itself (we will also be looking out for UK jobs data data tomorrow).
In any case, although the pound did rise by around 3% last December as the Conservative election win looked likely, and then happened, it was dwarfed by the calamitous falls of the past year – of nearly 10% around start of the lockdown period and 5% just last month.
We will be publishing our quarterly forecasts next week – an amalgamation of the predictions of many international banks and financial institutions – but I can tell you that the predictions for GBP/EUR range from 0.99 to 1.22 over the next 12 months. So, today’s rate – pretty much exactly between the two – looks like a safe rate to secure for the year ahead.
You can do that by chatting through your plans with your personal trader on 020 8108 5337.
