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The Latest Update On Brexit And The Pound Sterling

As the UK sails closer to a Brexit deadline, investors have been keeping a strong eye on the situation that has been unfolding these past weeks. After experiencing the lowest value of the year on March 18th at €1.06, the pound spent the rest of the year on a slow but long term recovery against some of the world’s major currencies. In the last week however, the pound Sterling has experienced a rollercoaster of valuations, with the Brexit news leading the headlines.

Source: tradingeconomics

December 11th

During the morning of December 11th the pound had dipped heavily in value, in reaction to Prime Minister Boris Johnson announcing that a no-deal Brexit would be ‘wonderful’ for the UK and is ‘very, very likely’. This comes after previously stating much earlier in negotiations that there was a ‘million to one chance’ of a deal being agreed. The negative sentiment around a No-deal Brexit is being fuelled by forecasts that state ‘a no-deal Brexit will swipe £40bn from the UK economy, putting 300,000 people out of work’. It is unknown whether such a scenario would actually prove true, but the fear of the unknown was enough to make investors shy away from the Pound at this moment in time. 

December 12th and December 13th 

Just days after however, this devaluation was wiped off, with the Pound rising to €1.08 to €1.10 the next two days (12th and 13th December). The initial deadline of talks regarding a trade deal were on the 13th, but an extension was agreed just days before to extend this deadline. Because of this, optimism rapidly reappeared about the possibility of a trade deal occurring between the UK and the EU. Therefore, investors have been quick to hedge in the Pound Sterling once again after doing the opposite just days before. In addition to this, despite Boris Johnson stating that a deal was unlikely, politicians claimed that the sides were ‘97% of the way there’ according to an article by ‘The national news’. 

December 14 till now Pound faces new Covid strain

On the 21st, the British pound took a pounding, as the U.K. concerns about a new strain of coronavirus and uncertainties arising from Brexit trade deal negotiations. The British pound had fallen more than 2% to $1.3236 on 21st, as compared with levels around $1.36 seen last week. Right now the pound was at 1.3345 against the dollar.

The sticking points  

Many news outlets have recently released reports on the sticking points in the Brexit deal. The common denominators seem to be- Fishing, and solving existing disputes. A key part of the Brexit referendum, British Fishermen felt that the English seas were being exploited by the EU. Currently discussions are ongoing, with France pushing hard to keep its rights to fish in these areas, but the UK fighting against this. An article by the BBC states, ‘The EU is pushing for maximum access for its boats to continue operating in UK waters, where they currently catch about £600m worth of fish every year.’

 

 

 

Image: twitter.com/BorisJohnson/status/1333750320669876225/photo/1

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