• Home
  • Blog
  • Sterling Loses Its New Brexit Deal Bump

Sterling loses its new Brexit deal bump

Safe Parliamentary options in Sunak & Hunt aid GBP long term..
Three headlines to get through in the report today, so let's go in release order. The new Brexit deal brought with it 2-days of GBP gains which most £ sellers on our books took advantage of. There was a 50/50 chance whether or not the Pound would increase in value after a deal had been struck, but a 90% chance that if it did, it would be not be substantial or long lasting. A deal arrived, Sterling increased in value by 0.5%, and has now lost the bump.. 

What the deal does bring is a brighter long-term future for GBP. A recent fractious relationship is being re-built between the EU & UK with both PM Sunak & Chancellor Hunt at the forefront. Steadying the ship has been the game-plan for the Government and so far it seems to be working. Near-term, the Pound has been protected by further losses because of the actions made by Sunak & Hunt and longer-term it should allow for a more flourishing currency. 

Next up, UK house price data. Figures released today show that UK house prices have fallen at their sharpest pace since 2012. Prices are down 1.1% year-on-year, making it the first annual decline since June 2022. Current prices are now 3.7% lower than the August 2022 peak and with the market unlikely to gain any momentum near-term (due to the cost of living crisis), economists are predicting a further 8% is still to be realised this year. 

Finally, dovish comments made by BoE Governor Bailey today have caused some weakness in the Pound. "I would suggest caution against suggesting either that we are done with rate hikes or that we will inevitably need to do more" wasn't very welcome on the market, after most data shows further hikes are still required to curb inflation. Remember, £ is trading in a hyper-sensitive environment and so any uncertainty surrounding the UK will create GBP weakness..