Sterling hits 3-month low against Euro

Hi everyone,



The Pound finds itself below the psychological barrier of £-€1.10 this morning after comments made by Boris Johnson over the weekend on Brexit. The PM said 'The UK would be ready to leave the transition period on Australia terms if an agreement couldn't be reached". No surprise in the comments made, but the market has seen this as negative anyhow and questioned the timing, as trade talks begin again today. Brexit headlines remain unsupportive of £ at present and will continue to devalue the currency near term.


Whilst pretty much all data-houses are predicting a very low chance of a no-deal Brexit (10%) at this stage, the next three months are likely to see much lower range levels for the Pound. £-€1.13-1.06 are being suggested with £-$1.30-1.18. Before Covid-19, rates were trading promisingly at £-€1.20 & £-$1.30, which is what we can expect again (and beyond) if a deal is to be struck between the EU & UK in October time. 


It does seem that both parties are behaving in a more constructive manner of late and the market will be watching closely to see if that has continued this week. Both sides have been floating compromises that could unlock areas of deadlock and analysts predict the outcome to come in stopgap measures, rather than a complete new deal in October to prevent a disorderly Brexit. 


The beginning of a new month always brings lots of important economic data for the market to get stuck into, so expect volatility this week. Especially tomorrow, as traders close off quarterly & monthly positions and begin afresh.  

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