The Pound has been losing value against the Euro in 2020 so far.
There are some worrying signs ahead that are making investors nervous.
Brexit looks certain to officially take place at the end of this month. It means trade talks with the EU will begin shortly.
The Chancellor, Sajid Javid, said on the weekend that the UK would not commit to sticking to EU rules post-Brexit.
That certainly won’t help get a deal done and has brought back fears of a hard Brexit.
The UK economy is also showing signs of weakness.
It’s got to the stage where there are rumours the Bank of England may have to cut rates soon. This could exacerbate the Pound’s decline.
We expect 2020 to be another year of Pound volatility, driven largely by Brexit news.
Negotiating a trade deal with the EU is likely to be tricky, particularly seeing Boris Johnson has set a ‘fixed’ 12-month transition deadline (it’s taken 3 years to get to this point!).
The PM may also be facing another battle on the horizon…
Scottish First Minister, Nicola Sturgeon, has requested the powers to hold another Scottish independence referendum. Boris has refused, but we sense this is the beginning, not the end of that battle.
There are always risks and opportunities in currency markets. It’s important to take advantage of the favourable moves while protecting the downside.