Pound Sterling at mercy of Brexit negotiations

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The air traffic between London and Brussels has been busy over the last week or so.

Theresa May has today returned from her latest visit safe in the knowledge that the ‘important step’ had been taken to move the negotiation talks onto the second phase. There are many issues of course to thrash out in the next few months non-less than the details of the expected two-year transition period after the UK officially leaves Europe in the March 2019. According to reports, in March we’ll move onto the thorny issue of security cooperation and trade talks. Angela Merkel hailed the progress taken so far but warned that it would get ‘even tougher’.

President of the European Council was complementary of the Prime Minister and congratulated her on reaching this stage stating that the more challenging and more demanding work was about to begin.

The market has been on another rollercoaster over the last week with joy over last week’s agreement both with the divorce bill and the Irish border issue had been clarified and this week of course with the official step in the second phase. That word uncertainty is never far away when Brexit is on the agenda and the truth is that it took a long long time to arrange how much we’re going to pay Europe to divorce them, and now the really work begins. Trade agreements and the definition of access or not to the single market are a vital part of the next few months and will greatly affect the economic outlook for small business, big companies and the countries growth prospects for the future.

The pound as a by-product to this is at the mercy of the negotiators perhaps and this could be enough to scare the pound into a move lower, or of course boost it further if we appear to moving in the right direction. Sterling will end the week a little lower at €1.13 and with a quieter period expected over Christmas now, we might not see a significant move until the New Year. As ever, be a live to the market swings and hoe for the best. Enjoy the festive period and let’s hope for calmer seas in 2018.

By Luke Trevail, Senior Currency Trader

* This article has been written by a third party not owned or controlled by Spanish Property Insight (SPI).
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