Sterling Stumped by PM Candidate Comments on Backstop Agreement

As we wait to hear the announcement of the new PM, there have been a number of developments in the market that could impact how you handle your current and future currency requirements.

Recently, the sentiment around Brexit seems to have changed and the likelihood of a No Deal or Hard Brexit has jumped significantly.

This has prompted the Bank of England to shift its stance from a rate hike after Brexit, to warning that a Hard Brexit could cut interest rates – possibly to negative rates.

The Money markets are currently pricing in a 53% probability of a rate cut in 2019.

This has led to a largescale selloff in Sterling that has seen the Pound weaken to recent lows.

Should the remaining candidates continue to talk about dropping the backstop agreement and walking away from Europe without interim trade deals, the Pound is likely to continue weakening and get back to levels last seen in early 2017.

How to plan your transfers in uncertain times:

There are several factors to consider when planning your international transfers as we continue to navigate through uncertain times. During times of volatility, you should look to plan ahead, take action and understand your attitude to risk in order to make confident decisions relating to your overseas transactions. You can read more about this process in our blog here

What could happen next?

Once the new PM has been announced they could look to renegotiate a new deal with Brussels or pursue a No Deal Brexit. There are many possible outcomes from each scenario, ranging from a Hard Brexit to ongoing negotiations through to a General Election in 2022.

Our flowchart below gives an indication of the type of scenarios we could see:

XE Brexit Flowchart
With such a variety of scenarios and outcomes, nobody can predict what will happen next, or how the UK will be impacted once a deal has, or has not, been reached.

We can be your eyes and ears in the market with a range of currency tools to help you monitor market movements. With your XE account you can make transfers online 24/7 and set up rate alerts so that you can keep track of the market.  

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