The currency markets don’t take any prisoners and certainly don’t wait around for retail customers to make up their mind. GBPUSD has now fallen back to pre-election levels, meaning that the 3.54% rally from 1.3051 to 1.3512 has now gone up in smoke, and we could be facing a plunge back under 1.30 again, given the current direction and momentum.
The Brexit “jitters” have come earlier than most would have anticipated, and when you couple this with the end of December trading conditions, it could be a bumpy eight days for the Pound. UK Inflation is due out this morning with markets closely watching whether the cap on domestic energy prices will continue to drag inflation lower. The expectation is that inflation will drop from 1.5% to 1.4%
All eyes are on the Bank of England tomorrow to see if they can lift the mood in camp, but for now, the immediate landscape is clear – Boris will legally prohibit any form of extension during the transition period resulting in a Trade Deal or a No Deal.
Our relationship managers are in the office over the usual Christmas business days to assist with year-end transfers and hedges.
Have a great day.