The pound opened the new week by holding a similar level to the close of Friday, after a volatile week which saw GBPEUR fluctuate between the 1.09 and the 1.11 barriers. Against the US dollar, sterling had an equally volatile week where it hit a lower range of 1.2860 and a high near 1.3080.
The biggest headline to come from the EU summit at the tail end of the week was when Boris Johnson announced on Friday lunch time that the UK would be preparing for an Australian style Brexit, which in simple terms is a no deal. The Prime Minister went on to say that there needs to be a “fundamental change” in the stance of the EU to continue to negotiate further to reach an agreement.
Movement in the markets is still indicating confidence of a deal of some kind being reached, however. Today the EU’s chief negotiator, Michel Bariner, will have a call with his UK counterpart, Lord Frost, to outline the steps ahead for further negotiations. Despite the willingness to negotiate further, the UK Government has launched a “Time Is Running Out” campaign, alerting businesses to be prepared for World Trade Organisation terms with the EU come the start of the new year.
Away from Brexit, the Governor of the Bank of England, Andrew Bailey, was speaking at an online event yesterday. The highlight of his speech is where he warned that economic growth in the UK will continue to be lower than expected, by then following on to say that it is better to act aggressively, opposed to cautiously. This is potentially leaving the door open for negative rates to be introduced into the UK, for the very first time.
Have a great day.
Author: Jack Nicholls, Relationship Manager
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