Sunday, the new Monday, as the pound weakens with renewed Brexit uncertainty.

The new Brexit deadline

We started the week with reports suggesting Prime Minister Boris Johnson was ready to end Brexit talks with the EU within hours and prepare Britain for a no deal exit on 1st January. Comments from leading figures within the European Union also suggested they were ready to walk away from talks. These reports caused big concerns and was reflected in the currency markets as pound sterling experienced once of its biggest day losses since March when the global pandemic caused shockwaves in the currency markets with the pound one of the biggest casualties at the time. By midday on Monday GBP had lost over 1% value against a basket of currencies, dropping to 1.09 GBPEUR, 1.3220 GBPUSD and 1.18 GBPCHF.

However, as the day progressed it became evident that though a deal wasn't imminent talks were not going to end on Monday and pound sterling managed to recover some of its losses giving in to hope that a deal was still possible. Wednesday was quoted as the new deadline with Boris Johnson heading for dinner with EU officials in Brussels and Brexit high on the agenda. Pound sterling yet again experienced another roller coaster day in the markets seeing highs of 1.3475 and lows of 1.33 against the US dollar and moving between 1.1130 and 1.1020 against the euro.

After talks on Wednesday night, both sides confirmed the gap between remained substantial, this statement weakened the pound viewing it as another failure with little time remaining for the gap to be narrowed and a deal concluded. The EU and UK have agreed to set this Sunday as a ‘new’ deadline for a deal to be done. This at least offered a ray of hope that ultimately a deal can be reached, with this mutual agreement to continue negotiating. As a result, the pound has continued its downward slide, however not as damaging as the decline we witnessed on Monday.

Will Sunday deliver a different outcome that the 101 previous deadlines have failed to provide over the last 4 years? Looking at the form guide a betting man would likely say ‘no’, but what is different from all previous deadlines is that by Sunday they will only be 18 days remaining until the UK officially starts life outside of EU law, and with the Christmas holidays to fit in between these 18 days, there is little to no time left now to continue to kick the can down the road, with the dead end sign in clear sight. As each day passes without the UK and EU coming together the risk of a no deal gets greater, with a greater risks to pound sterling's value against most currencies. Any sign of a deal being agreed or even better confirmation of one deal finalised then the pound has every chance of ending the year on a high!

European Central Bank meeting day

Outside of Brexit talks, focus today will also be on the European Central Bank when they meet this afternoon to announce any policy changes to be made by the central bank. No interest rates adjustments are forecasted, however the EBC are expected to address the growing strength of the euro currency this year, where against the USD has seen gains of over 8% in 2020 recently breaking the 1.20 barrier for the first time since April 2018. A strong euro in the current climate will be a concern for ECB President Christine Lagarde and her board as it acts as a deflationary force in the Eurozone economy. So attempts could be made to try and weaken the euro, an act that previous ECB presidents have repeatedly tried and mostly failed over the years.

Are you looking to make a currency transfer soon? To be kept update with latest news and rates feel free to get in touch with us or simply request a no-obligation quote today.