Good morning,
The pound has opened the new week where it left off the last, making steady gains against major other currencies. Riding a wave of optimism, following positive Brexit sentiment, traders are yet to panic and sell UK assets, as you would possibly expect with only 3 months until the deadline for the official Brexit date. The ninth round of talks will begin in Brussels this week, where headlines will guide the exchange rates. This currently leaves the rates against the US dollar and euro at 1.2795 and 1.10 respectively.
An article was released by the Telegraph on Saturday, with Monetary Policy Committee member, Silvana Tenreyro, discussing the prospect of negative interest rates in the UK. Why are negative interest rates such a big topic? FX flows are predominantly influenced by central bank interest rates. If an investor can save more money in one country compared to another, natural instinct is to move to where your money earns more for doing little work.
Last week, Bank of England Governor, Andrew Bailey, said that it had been a “mixed bag” of successful results from other countries who had taken the bold move. However, it would be foolish not to look at the possibility for the UK. On the other hand, MPC member Tenreyro was quoted as saying the results had been “encouraging” and banks had seen increased profitability. Still pound traders will sit and wait for further headlines as the MPC members are briefed on the risks and rewards of negative rates heading into Q4.
The ECB president Christine Lagarde is due to speak mid afternoon UK time today. She will be delivering an opening speech to the ECON committee in Brussels. Being so close to the crunch time for Brexit talks, it would be surprising if there was not any comment on the developments and looking forward towards 2021.
Have a great day. 
Author: Jack Nicholls, Relationship Manager
Whilst every effort is made to ensure the information published here is accurate, you should confirm the latest exchange rates with WorldFirst prior to making a decision. The information published is general in nature only and does not consider your personal objectives, financial situation or particular needs. Full disclaimer available here.
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