Brexit crisis deepens with still no majority in government.
With market sentiment for GBP/EUR rate so volatile at the moment typical trends we’re use to seeing are changing by the hour. Thanks to the news coming from ITV, Sterling exchange rates are holding on to most of its gains from last week. Current key trading level is now around the €1.1660’s. If we see the rate move LOWER than this level for a sustained amount of time, then the likelihood of the rate moving into the high €1.1630s will be high. As with such high volatile times the rate could easily move up HIGHER on the back of an unexpected Brexit updates and if we see the rate move above €1.17’s for a sustained amount of time then we could see it push towards the €1.1770’s. It should be noted that on two occasions now over 2 weeks ago the rate pushed towards the €1.18’s but failed to push higher. Anyone hoping to achieve €1.18+ will need to keep in mind that the best chance of seeing this happen will be PM May getting her deal through the House of commons. This is in my eyes is the best case scenario for Sterling exchange rates and anything else won’t have as positive affect.
Last week the House of Commons rejected the EU Withdrawal Agreement for a second time, and voted to delay Brexit. Chancellor Hammond’s Spring Statement revised down borrowing projections, increasing headroom for potential giveaways later this year. Overall Sterling exchanges rates were all up much higher as markets attached a lower risk to a ‘no deal scenario. However since then sentiment has changed and yesterday afternoon reports suggested talks between the DUP and May have broken down also announced at pretty much the same time was the House of Commons speaker who has ruled against a 3rd meaningful vote until the deal is changed in some way. MP’s raised concerns that they would be voting again on the same deal without any changes to it which led to the Speaker making this announcement without notifying May beforehand. This has now made May’s situation even more difficult.
The week ahead is (once again) a key one for Brexit but its hear at last. Meanwhile, the Chancellor of the Exchequer will give his Spring Statement. It is unlikely to herald any immediate policy actions, but will set the context for some important upcoming decisions.