Brexit Uncertainty Continues to Infuse Volatility in the Pound (GBP)
The Pound (GBP) has traded in a wide range over the last week, mostly as a result of ongoing Brexit uncertainty, which continues to inject volatility into the UK currency.
This came as Boris Johnson laid out his ‘final’ Brexit offer to the EU, a plan which the PM said was aimed at ‘bridging the chasm’ that has plagued negotiations in recent months.
His plans garnered broad support from Conservatives and the Democratic Unionist Party (DUP) leading Sterling to spike on Thursday, amidst hopes a subsequent deal would stand some chance of making it through parliament.
Unfortunately for GBP investors these gains proved mostly fleeting as the EU appeared less receptive to Johnson’s proposals, with the president of the European Council, Donald Tusk suggesting the EU was ‘unconvinced’, by his plans.
However the EU didn’t outright reject Johnson’s proposals, and tasked him to find some fresh solutions to some key outstanding issues, namely on how exactly he intends to avoid a hard border in Ireland.
Brexit to Keep GBP Investors on their Toes this Week?
Looking ahead, we expect to see Brexit developments continue to act as the main catalyst of movement in the Pound (GBP).
This may see GBP exchange rates continue to trade erratically as the UK and EU continue to spar over the UK’s withdrawal deal.
We expect to see talks intensify this week as well after EU set a deadline of 11 October for Boris Johnson to resolve the remaining sticking points.
On top of this, the looming threat of a general election may also cap any upside in the Pound.
In terms of data, the only release of note this week is likely to be the UK’s latest month GDP report.
This could see Sterling face some headwinds as economists forecast the UK economy will have stagnated in August.
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