Brexit anxiety softens the Pound

Hi everyone,

Reuters today outlined their predicted range movements for Sterling come 'Brexit' day -

2-5% gains if a divorce deal can be agreed
5-10% slide on a no-deal Brexit

Unfortunately, there isn't much suggestion going around on which is the likely outcome at this stage, but the above shows how dangerous it could be for the Pound if we leave without a deal.

Theresa May finishes with meeting DUP members today and heads to Brussels tomorrow. Comments following these meetings may move the market, although May's comments yesterday on avoiding a hard border did little. 

If Brexit wasn't happening right now, then what I am about to talk about next would be the leading headlines for weeks/months to come. Italy has now officially fallen into a recession with Germany close behind in a 'technical' recession (meaning 2 consecutive quarters of negative growth).

It's been a long time coming for Italy with their huge debt issues and it's been just 5 years since the PIIGS of Europe (Portugal, Italy, Ireland, Greece and Spain) were all in financial trouble. Actually, none of these countries are doing particularly well with debt, so after the Brexit dust clears, we would expect this to then take centre stage. 

This 'may' be the reason why Sterling isn't trading as low as first expected and it 'may' just steer the chances of a divorce deal higher.


 

 

 

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Dan Waterman
Office Manager

 
 
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