Brexit uncertainty and yet a strong sterling?

CB19Kevo

Anyone who has been keeping a glance on exchange rates may have noticed that not alone is the GBP not actually falling amidst all the uncertainty but has actually had some small increases since mid December.

currencies normally suffer as a result of unstable government, And with Brexit day getting ever closer i am rather perplexed at the current rates.

Can we expect the sterling to nose dive in the next few weeks if a No deal brexit looks like becoming reality.

seamus

Sterling has gone up slightly because markets think a no deal Brexit is too batsh1t crazy to happen.

If nothing changes between now and Paddy's Day in relation to Brexit, then you can expect to see the sh1t hit the fan.

robman60

I am dumbfounded by it too. Pound has gained 3p against the Euro in 2 weeks. Don't see how no deal is any more unlikely now than it was a month ago. If anything, I would have thought it more likely. I've converted some sterling to euro and I intend to convert straight back as I'm predicting we will have more uncertainty yet.

The Conservatives could never be the ones to call a second referendum-it would open up 52% of the population to another market.

I definitely don't think this is near over yet.

Capt'n Midnight

https://www.reuters.com/article/uk-britain-sterling/sterling-lifted-by-report-that-britain-will-delay-brexit-date-idUSKCN1P5128

“I can see a scenario where we fall to $1.10 and I can easily see a scenario when we move to $1.45,” said Fahad Kamal, chief market strategist at Kleinwort Hambros.

Grieves' amendment giving power back to the House of Commons made Brexit less likely. It may be the default but it's probably not going to happen.

rob316

It's a small bump but could fall again quickly, its not strong by any means sterling. Uncertainty will see it still struggle to break over 1.15 per €1, there has to be support at this rate, indications are there isn't.
Currently the markets are been manipulated slightly by optimism, trouble is reality is long coming afterwards.

VinLieger

Strong sterling? It was up at 1.40 just prior to brexit, an increase from 1.11 to 1.14 could hardly be described as strong.

razorblunt

The market is indicating that a move away from Brexit is a good thing in their eyes.

May and co can't see as their heads are in the sand.

Marcusm

razorblunt wrote: »

The market is indicating that a move away from Brexit is a good thing in their eyes.

May and co can't see as their heads are in the sand.

I think it’s a response to the removal of the near term possibility of a Corbyn led government rather than progress/no progress on Brexit.

RedRochey

I think a lot of the fall has happen already, the vote result on Tuesday wasn't a surprise so no real reason why the currency should've moved

I would speculate that there are two reasons for this

The markets have no idea what is going to happen, so aren't making any big predictions at the moment, other than a no deal crash out is looking more unlikely. Mrs May winning the vote of no confidence has helped as well, as it means Corbyn won't be PM for a few years yet.

Brexit will also affect the Euro, as it could have a significant impact on the GDP of several of the larger economies. This is more relevant as the German economy is slowing down and there is talk of a recession, or at least negative growth, in Germany. So if you are going to sell Sterling, you probably aren't going to buy Euros. https://www.wsj.com/articles/germany-economy-slows-in-worrying-sign-for-global-growth-11547545471

RMAOK

Marcusm wrote: »

I think it’s a response to the removal of the near term possibility of a Corbyn led government rather than progress/no progress on Brexit.

The markets are expecting that the UK will ask for an extension on article 50, while will probably lead to the UK eventually to decide to remain in the EU.

According to a recent poll, remaining in the EU has shot up by 12% since the referendum. I don't have a link to that stat - think it might have been a a Yougov poll, but I'm not certain.

recyclebin

10 years ago I worked for company that exported most stuff to UK. They were getting 1euro to about 65p. Sterling has significantly weakened over the long term.

woddensanta

recyclebin wrote: »

10 years ago I worked for company that exported most stuff to UK. They were getting 1euro to about 65p. Sterling has significantly weakened over the long term.

Look at the 10 year average, other than the spike just before the referendum caused by speculators it's not really that radically weak, there has in fact been several times in the last few decades when sterling was weaker.

PhoenixParker

woddensanta wrote: »

Look at the 10 year average, other than the spike just before the referendum caused by speculators it's not really that radically weak, there has in fact been several times in the last few decades when sterling was weaker.

Can't really go back further than 20 years.

In long term Irish terms, there was always panic about the impact on our economy if sterling remotely approached parity with the punt. Sterling was worth more with few exceptions.

These days 1 Irish Punt would buy you 1.12 Sterling.
Or a pound sterling would buy you 89 irish pence.
That is very much at the extremes of what was historically normal.

Graph from 1980 for illustration
http://fxtop.com/en/historical-exchange-rates-graph-zoom.php?C1=IEP&C2=GBP&A=1&DD1=01&MM1=01&YYYY1=1980&DD2=18&MM2=01&YYYY2=2019&LARGE=&LANG=en&CJ=0&MM1Y=0&TR=

(Euro version: http://fxtop.com/en/historical-exchange-rates.php?A=1&C1=IEP&C2=GBP&MA=1&DD1=01&MM1=01&YYYY1=1980&B=1&P=&I=1&DD2=18&MM2=01&YYYY2=2019&btnOK=Go%21 )

Up to the financial crisis in 2009 Sterling was far stronger.
It was gradually recovering until just pre-brexit and it's effectively been in the toilet since.

The current rates are nowhere near "strong".

orourkeda1977

It wasnt that long ago that the euro almost collapsed.

Is the euro that strong?

Spannerplank

PhoenixParker wrote: »

Can't really go back further than 20 years.

In long term Irish terms, there was always panic about the impact on our economy if sterling remotely approached parity with the punt. Sterling was worth more with few exceptions.

These days 1 Irish Punt would buy you 1.12 Sterling.
Or a pound sterling would buy you 89 irish pence.
That is very much at the extremes of what was historically normal.

Graph from 1980 for illustration
http://fxtop.com/en/historical-exchange-rates-graph-zoom.php?C1=IEP&C2=GBP&A=1&DD1=01&MM1=01&YYYY1=1980&DD2=18&MM2=01&YYYY2=2019&LARGE=&LANG=en&CJ=0&MM1Y=0&TR=

(Euro version: http://fxtop.com/en/historical-exchange-rates.php?A=1&C1=IEP&C2=GBP&MA=1&DD1=01&MM1=01&YYYY1=1980&B=1&P=&I=1&DD2=18&MM2=01&YYYY2=2019&btnOK=Go%21 )

Up to the financial crisis in 2009 Sterling was far stronger.
It was gradually recovering until just pre-brexit and it's effectively been in the toilet since.

The current rates are nowhere near "strong".

I can't ever remember sterling being weaker than the punt.

EdgeCase

It's trading a lot more like a developing market's currency - weak and wobbly.

The investors are clearly convinced the chaos will lead to no Brexit or a highly weakened version of it.

If there's a crash out in March, and that hasn't been priced in, there'll be market carnage.

There's a big influence of London bubble financial media so I suspect a lot of that traders have been drinking the Brexit Kool-aid.