Mid-week report Report 23rd - 25th January 2019
Sterling exchange rates unexpectedly rise again against both the US dollar and the Euro as once again fears that the UK will leave the EU on March 29 without a deal continue to recede. The immediate stumbling block for a deal, the Irish backstop , is now being debated with much greater urgency, both sides of the table still looking to for a deal without a hard border in Ireland. There's ongoing attempts by various groups of MPs to get a No Deal Brexit option taken off the negotiating table, although PM May is currently resisting these plans. What is becoming more likely though but not probable yet is that a last minute Soft Brexit deal will be passed eventually, although it may mean Brexit is delayed to help break the deadlock.
Expectations that a Soft Brexit deal are accepted will continue to boost GBP exchange rates although the market remains vulnerable to negative updates on Brexit. PM May’s Plan B will voted on again next Tuesday, January 29. This vote, or a change in voting pattern, may well provide the next catalyst for Sterling movements.
To the US and The senate will vote on two separate bills to end the government shutdown today. One has the support of the President, and would give money to fund the Mexican border wall, but seems unlikely to get support from the Democrat led House of Representatives. The other has Democrat support and would fund the government through 8th February but does not resolve the Mexican wall dispute. This suggests the issue is still some way from resolution.