The pound began Friday by hitting a six-week high against the dollar, as investors remain optimistic about the UK agreeing a deal with the EU. However, as the day wore on, it fell back a little. Last week was dominated with Brexit-related news, with 28 no-deal planning documents revealing some of the potential impacts of a no-deal Brexit. While it is true that there is still an element of government infighting over the best route forward, the EU looks increasingly open to agreeing a deal before the deadline.
However, it would be irresponsible to say that a deal will definitely be reached. When you consider that some analysts believe that the pound could fall as much as 8% the day after a no-deal Brexit is announced, it clearly makes sense to put risk management strategies in place. If you are a client of ours, you’ll no doubt be aware of our budget, risk, solution (BRS) approach, but for those of you who aren’t well versed, it bears repeating.
Put simply, we believe the BRS approach is the most effective to determine each client’s requirements. We work with you to understand your budget and what foreign transfers you’ll be making. We work out how much risk you’re exposed to and how we can help to protect your budget. Often, this will involve using a forward contract, whereby we lock in the exchange rate for up to 12 months. Do give your Personal Trader a ring on 020 7898 0500 to find out more.
The UK economy is in better shape than first thought, with GDP growth accelerating to 0.6% in the three months to July 2018. The Bank of England and European Central Bank voted to keep interest rates on hold, while inflation unexpectedly fell in America. This increased concerns that the Federal Reserve won’t increase rates when it convenes on 26 September 2018. Still, it is expected that rates will be hiked by 25 basis points and there is currently an 84.2% chance of an increase in December.
This week’s highlights include the eurozone’s inflation rate for August, with the UK’s scheduled for release on Wednesday, and we will also see a raft of purchasing managers’ indices on Friday.