Pound starts 2020 on a sour note as Brexit uncertainty returns

  • The pound has been driven lower over the last couple of weeks as Brexit related uncertainty and a dovish Bank of England (BoE) take their toll on the currency.

    This has seen GBP/EUR slump from 1.18 to 1.16 as EUR/GBP accelerated to 0.85.

    Meanwhile, GBP/USD has slipped from 1.32 to 1.29, whilst EUR/USD eased from 1.12 to 1.11.

     

    Staying on top of the latest currency news can help you time your transfers more effectively, so find out what you should be looking out for over the next couple of weeks…

    What’s been happening?

    The pound is off to a poor start so far in 2020, with investors fearing the UK will face a no-deal Brexit this year amid scepticism Boris Johnson will be able to reach a trade deal with the EU by December. 

    Also weighing on Sterling sentiment have been some dovish remarks from the BoE, sparking speculation the bank could cut interest rates in the first half of 2020. 

    The euro has also struggled over the past couple of weeks, undermined by some weak German economic data and broad USD strength.

    This uptick in the US dollar has been largely driven by a risk-off mood in markets in light of heightened tensions in the Middle East following the US killing of Iranian general Qasem Soleimani. 

     

    What do you need to look out for? 

    In the UK the spotlight is likely to remain on Brexit through the remainder of January as the country prepares to officially leave the EU at the end of the month.

    For EUR investors the focus will be on the European Central Bank (ECB) as it holds its first rate decision of 2020 and begins a wide-ranging review into its policy strategy. 

    Meanwhile, the US dollar may strengthen in the weeks to come as the signing of a ‘phase one’ deal between the US and China will help to ease trade tensions between the two powers.

     

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