Sterling rose after a Bloomberg article yesterday (28 October) reported that a Brexit deal was closer into view as talks progressed. Both sides were participating in an intensive round of negotiations in London, and, on Thursday, the talks will move to Brussels. If more progress is made by 3rd of November, the UK Prime Minister Boris Johnson and European Commission President Ursula von der Leyen will then have to negotiate a final agreement.

Today, though markets remain nervous ahead of the US GDP and ECB meeting as the escalating Covid-19 pandemic has triggered renewed fears of a double dip downturn. With a second lockdown in France and new restrictions about to be imposed in Germany, investors are on edge.

Pound rises on Brexit progress

European Union and UK negotiators managed to resolve “some of the biggest disagreements that have long bedevilled the Brexit talks, raising hopes that a deal could be reached by early November, according to people familiar with the discussions,” Bloomberg noted.

According to the article, sources said that the deadlock has been broken after seven months of negotiations, but traders will still need to see more solid evidence to be convinced of any progress. The sources reported that both sides are working on “the text of an agreement on the level competitive playing field and are close to finalizing a joint document covering state aid.” They have also “moved closer to deciding essential aspects of how any accord will be enforced,” the sources added.

The news pushed the pound higher against the Euro and the majority of its G10 peers. While markets remain cautious, some economists believe that there are positive signs for reaching a trade deal.

The Brexit news should offer support to a pound that has been very sensitive to Covid-19 developments, at a time where lockdowns are devastating economies. In the event of a second wave the pound will definitely remain sensitive and could weaken, and analysts say that positive Brexit news might not be enough to support the pound in the current volatile environment. In this respect the upside potential for the pound is seen to be limited, as many more issues remain to be resolved regarding the Brexit talks, despite recent news.

Despite the recent doom and gloom, there are potential business opportunities to be had with Brexit, “from fishermen to airlines and insurers,” according to an article.

Risks to the pound

Sterling has been sensitive to Covid-19 updates and Brexit news, and it will remain so. According to Pound Sterling Live, “An obvious risk for those watching Sterling exchange rates is that negative Brexit news - which would most likely be a stalemate on fishing - combines with 'risk off' market conditions to trigger substantial declines in value.” But the stimulus support from Central Banks might be enough to support world economies and protect from unexpected currency declines seen in the aftermath of the first wave of Covid-19.

Are you Transferring funds abroad?

With the British currency remaining sensitive to Brexit uncertainty, you should get professional assistance when transferring funds abroad. Whether you are importing or exporting goods, paying employees overseas, or managing regular payments abroad, you need to be prepared and protect your business or your family finances from market volatility. Get in touch with Universal Partners FX to find out about efficient risk management and tailored solutions to your business’ transfer needs.

 

A weak US dollar and rising hopes for a trade deal between the European Union and Britain helped Sterling rise on Tuesday afternoon.

Analysts are now saying that the pound could rise further in the event of a post-Brexit trade deal. This, of course, is something we have seen every time that there was any positive news pointing to a breakthrough to the negotiations. Sterling fell immediately after the UK referendum vote to leave the EU in June 2016, as political uncertainty hurt the pound. Since then, Sterling has been volatile every time news was released regarding Brexit and has fallen on news of a stalemate in the negotiations or disappointing updates from both sides. As we are nearing the end of the Brexit transition period, and the possibility of an agreement appears more certain, the pound will most possibly react positively and rise.

A possible agreement by mid-November will support the pound

Optimism regarding the trade talks has risen recently after the EU’s negotiating team and Michel Barnier the EU’s chief Brexit negotiator said that they will resume talks in London until Wednesday 28 October and many reports have noted that an agreement could be reached by Saturday, 31st October 31.

Any time from now until the middle of November, when a possible deal might be reached, Sterling could strengthen as long as the two sides ensure that a no deal scenario is not in the cards.

By reaching an agreement, both sides will provide certainty to businesses and investors, eliminating uncertainty, restoring sentiment and offering relief to the pound.

USD weakness to support the pound

For many analysts, the pound might rise, but this might not be a sharp rise and it will only be the result of a depreciation of the USD. At the same time, they predict that a strategic buying of Sterling in anticipation of a deal being reached might be possible, but this will be short-term.

According to Pound Sterling Live, Rabobank see potential for the GBP/EUR exchange rate to rise if a Brexit deal is announced, but such a rise will be limited.  Jane Foley, Senior FX Strategist at Rabobank said: "We don’t expect that relief at the end of the Brexit process will be sufficient to divert attention away from a poor set of UK fundamentals," she adds.

"If we are wrong on the market’s assigned relative probabilities, then Sterling will move more or less than we expect. Given the better mood music of recent weeks, risks appear skewed in favour of a smaller move,” Paul Robson, Head of G10 FX Strategy EMEA at Natwest Markets said. But they also highlighted the issues lying ahead, including that of companies having to adjust to the new realities after Brexit and the potential disruptions in various sectors, including the auto industry that were recently highlighted by the automobile sector.

Potential threats ahead

Economists are emphasising the fact that Brexit will not only disrupt various industries and create uncertainty about the future of businesses, but it will add to the UK’s existing problems. The economy is currently hit by Covid-19, government finances are deteriorating, and lockdown restrictions are hurting the economy further. With a weak economy and limited investment flows, the pound might have a rocky road ahead, with or without a Brexit trade deal.

Are you Transferring funds abroad?

With the British currency remaining sensitive to Brexit uncertainty, you should get professional assistance when transferring funds abroad. Whether you are importing or exporting goods, paying employees overseas, or managing regular payments abroad, you need to be prepared and protect your business or your family finances from market volatility. Get in touch with Universal Partners FX to find out about efficient risk management and tailored solutions to your business’ transfer needs.

We are delighted to announce our nomination for Best International Money Transfer Provider at the Moneyfacts Consumer Awards 2021.

This is the second year running we have been nominated for this award, highlighting the client satisfaction we deliver on a consistent basis. 2020 has been a challenging year, but one of steady growth for Universal Partners FX and we are very pleased to end the year with more recognition after our 20th position ranking in the Start Ups 100, our listing by the Crown Commercial Service  and our nomination for the Money Age Awards. We hope that 2021 brings more growth and recognition, but above all, the continued satisfaction of our clients.

The winner of the award will be announced on 27th January and we are up against some of the biggest names in the industry. We'd like to congratulate our staff who combined provide the excellent service to our clients each and every day.

 

European automobile manufacturers have called on the EU to take a softer stance regarding the UK’s future market access, and they warned that the bloc’s harsh position could have long-term effects on the automobile industry. In June, more than 50 European and British food and drink trade associations wrote to Brussels to request for more flexibility, underlying the fact that a tariff-free trade agreement needed to be coupled with the assurance that businesses will be able to benefit from it.

Why does the manufacturing sector worry?

For UK and EU importers and exporters, it is important to maintain a frictionless access to the single market. Manufacturing businesses are aware of the damaging effects of Brexit and the ensuing disruptions to their sector. Brexit-related uncertainty has made it very difficult for most sectors to prepare for a post-Brexit business environment and reduced the possibility of securing investment.

UK manufacturing is integrated into the EU single market, as almost half of all UK goods imports and exports are with the EU. Many UK manufacturers are dependent on frictionless trade with the EU so their supply chains are not interrupted. With the possibility of a no deal Brexit, manufacturing sectors are concerned about a potential lack of regulatory alignment with the EU as no business wants to lose the privilege of free trade.  According to independent research from the UK in a Changing Europe initiative, some sectors, such as automotive, could be severely affected if they have to pay tariffs to export cars to the EU in the absence of any agreement with the EU. As they warned, “In almost all cases, Brexit will create additional financial or other cost burdens for companies: tariffs, customs declarations, certification costs, audits to ensure rules of origin compliance, loss of collaboration opportunities in R&D, border delays, EU customers switching to other suppliers, visa costs for EU workers, and so on.”

Letter from the European Automobile Manufacturers’ Association (ACEA)

In a letter from the European Automobile Manufacturers’ Association (ACEA) last week, the association which represents  some of the biggest car manufacturers in the world, including BMW, Toyota and Fiat, warned Brussels that some aspects of the bloc's current stance are "not in the long-term interests of the EU automotive industry.” The ACEA urged the EU to "reconsider its position" on tariff-free trade. In its letter, sent last Thursday, 15th October, the ACEA requested from the EU to reduce the percentage of car components manufactured in Europe or Britain so that the businesses can benefit from any EU-UK trade deal. The car manufacturers are urging that the new rules be introduced slowly so that the automobile industry has the time to prepare and adjust for the new rules and environment. For EU manufacturers, an agreement that provides tariff-free, quota-free trade on all goods is crucial.

EU chief negotiator Michel Barnier has told businesses that “short-term adaptation costs” were necessary to protect “long-term economic interests.”

Nicolas Peter, BMW’s finance director, has said in a press conference last week: "The European Automobile Manufacturers Association (ACEA) has estimated that it could cost car manufacturers and suppliers from 10 to 11 billion euros, so we need tariff-free trade. And even then, it must be seamless. We have a just-in-time production system, so customs administrative processing must be efficient."

Are you a Business Transferring Funds Abroad?

If you are an exporter or importer and worried about your international trade costs, and the volatility of the British pound, you should get professional assistance when transferring funds abroad. Get in touch with Universal Partners FX to find out about efficient risk management and tailored solutions to your business’s transfer needs.

Pound volatility is expected to be high today and on Monday as the markets await Prime Minister Boris Johnson’s decision on whether the UK stays or leaves the Brexit negotiating table.

In the meantime, England is dealing with the rise of new Covid-19 cases and restrictions which will come into force under the government’s new three-tier system with London facing tighter restrictions from midnight on Friday.

Under this generalised gloomy climate, investors are waiting to hear whether the UK will continue with the Brexit talks. Last month, Johnson had set a deadline for a possible deal for the 15th October, and said that if nothing had been agreed, both sides should “accept that and move on.”

At a Brussels summit on Thursday, the EU proposed “two to three weeks” of negotiations. Investors are now closely watching to see whether the PM will try and resume the negotiations or stick to his threats and walk away.

Brexit pessimism pushed the pound lower against the US dollar, while it remained flat against the euro. At the same time, the prospect of tighter lockdown restrictions could further hurt the pound and threaten economic recovery. Jasper Lawler, head of research at LCG, said that more lockdown measures could push the UK and European economies into a deep recession: “The British government is under pressure to follow scientific advice for a 2-week circuit breaker national lockdown but has so far resisted, but has raised the capital to the Level 2 tier of restrictions. That means two different families can no longer mix indoors- be that in their home or in a pub or restaurant. There is still no sign of the joint European recovery fund so in the meantime economies stand to take the hit – risking a double dip recession – from the new restrictions.”

Angela Merkel urges Boris Johnson to keep negotiating over Brexit

The German chancellor has urged Boris Johnson to continue and not to walk out of the trade and security negotiations. In her comments that were designed to calm the atmosphere, Merkel said that both sides needed to find common ground: “In some places things have moved well, in other places there is still a lot of work to be done. We have asked the United Kingdom to remain open to compromise, so that an agreement can be reached. This of course means that we, too, will need to make compromises.” Her comments also come after Thursday’s summit where French president, Emmanuel Macron, demanded that the UK accept the bloc’s conditions or face a no-deal exit.

The EU had proposed a further “two to three weeks” of negotiations as the EU’s chief negotiator, Michel Barnier is scheduled to be in London on Monday to continue negotiations. Like Merkel, Barnier also said that the EU wants to give every chance to the negotiations so they are successful: “We’re available, we shall remain available until the last possible day.”

The UK’s chief negotiator, David Frost, expressed his disappointment after Thursday’s summit and tweeted: “Disappointed by the conclusions on UK/EU negotiations. Surprised EU is no longer committed to working ‘intensively’ to reach a future partnership as agreed with [the European commission president, Ursula von der Leyen] on 3 October. Also surprised by suggestion that to get an agreement all future moves must come from UK. It’s an unusual approach to conducting a negotiation.”

The foreign secretary, Dominic Raab, said that a deal was still possible: “We’ve been told that it must be the UK that makes all of the compromises in the days ahead, that can’t be right in a negotiation, so we’re surprised by that, but the prime minister will be saying more on this later today. Having said that, we are close [to a deal]. With goodwill on both sides we can get there.”

While challenges remain when it comes to the Brexit negotiations with the level playing field, fisheries, and governance, still unresolved, many are positive that there could be an agreement if significant work is done.

Are you Transferring funds abroad?

If you are concerned about a no-deal Brexit, and the British currency remaining sensitive to Brexit uncertainty, you should get professional assistance when transferring funds abroad. Get in touch with Universal Partners FX to find out about efficient risk management and tailored solutions.

If you are considering buying a dream home abroad or simply investing in a desirable location where you can rent your property or relocate for good, then you must have looked at Spain as your top destination. Well, you were not wrong, as Spain continues to top the list for places to relocate or buy a property abroad.

According to iProperty Management’s research, Spain, which is already the top destination for Brits,  was the most searched for country, with 690,360 searches, 37,600 of which were from UK internet users. Following Spain, with less than 194,000 searches was Canada.

Spain is especially popular with Brits who made up 69% of expats in 2018. According to the data, those who want to invest in a property that will see demand from expatriates looking to relocate, should consider Spain. Among the top five, France and Portugal have also been a favourite location for Brits and the two countries saw 484,800 and 212,280 searches, respectively.

The interest in these countries does not simply result from the fact they are beautiful and desirable locations for retirement or for vacation. They are members of the EU and thus residents living in each of them are allowed to move and work freely.

 Spain is cheaper than London!

If you are hoping to get onto the property ladder, Spain is a good option. There are plenty of reasons for that as the number of expats in the Costa del Sol could attest. But beautiful location, gorgeous buildings, sunny beaches and good food can simply explain why you would want to settle there.

If you are buying property, the choice of buying within a gated community such as those located in the towns of San Pedro de Alcantara and Estepona, can offer security and peace. According to the Olive Press, a three bedroom apartment in Estepona  will cost around £200K, whereas the same amount could only get you a studio apartment in London, for example.

Places such as Marbella and Banus are also appealing due to the fact that they are secure and provide a great lifestyle. But also other areas on the Costa del Sol such as Casares Costa. Estepona, for example is only 20 minutes west of Marbella and is relatively cheaper than other more sought-after locations while offering a more authentic flavour of Spain. Guadalmina Ata poses a more pricey location where one can purchase beautiful properties exceeding €2 million.

For many Brits, and due to Covid-19 and Brexit, Spain appears to be the ultimate destination where they can retire and feel secure, while remaining part of the EU. Indeed, the number of Brits buying property in Spain has risen a lot recently due to Brexit.

Just looking at the data showing where Brits are registered in Spain, is indicative of the places and the kind of appeal they have for different age groups. The British community is concentrated along the coast, in Alicante and Málaga, and more than a third of residents are over 65. Madrid and Barcelona are a favourite among the younger generations who want to work and enjoy a more busy lifestyle.

Currency Exchange

If you are buying a holiday home in Spain, it is important to consult a specialist foreign exchange company such as Universal Partners FX right from the start. UPFX can help you manage currency fluctuations by locking the rate, as the final price of your home could vary significantly from the time you made your offer.

When moving large amounts of cash, it is best to get in touch with UPFX’s currency specialists where they can offer you competitive exchange rates and the best value for your money. Find out what your money is worth by giving them a call or requesting a free quote.

International businesses have been preparing for Brexit while carefully watching updates regarding the coronavirus pandemic and slow economic recovery. On Friday, news that the UK borrowed a record of £35.9bn in August, with borrowing since August hitting £173.7bn, while factory output dropped 44% last month, have added to concerns of a weakening economic recovery.

Importers and Exporters Facing New Customs Controls

UK cabinet minister Michael Gove, in a letter to logistics groups, has already stressed the government's analysis in regards to the potential disruptions that could affect importers and exporters once the Brexit transition period ends.

The cabinet document stated that queues of up to 7,000 trucks might form in Kent, resulting in two-day delays in the worst possible scenario. The document also said that, "Irrespective of the outcome of negotiations between the UK and EU, traders will face new customs controls and processes. Simply put, if traders, both in the UK and EU, have not completed the right paperwork, their goods will be stopped when entering the EU and disruption will occur."

On a more general note, but equally worrying, reacting to Brexit, JPMorgan has decided to move $230 billion in assets from London to its Frankfurt-based subsidiary in Germany.

UK Borrowing Increases, as Car Production Drops

Britain’s economy has been terribly hit by the Covid-19 pandemic as it was announced on Friday. The government borrowed £35.9bn last month according to the Office for National Statistics. The UK has now borrowed £173.7bn since the start of the financial year in April, as a result of the pandemic. August’s borrowing has pushed the UK’s national debt to £2,023.9bn, and the ONS estimates that UK borrowing could exceed £372bn for the current financial year.

The ONS says the increase in borrowing was caused by a fall in tax receipts, and the ongoing cost of protecting the economy. Central government tax receipts are estimated to have been £37.3 billion in August 2020 and central government bodies are estimated to have spent £78.5 billion on day-to-day activities (current expenditure) in August 2020. Britain can borrow at record lows and the Bank of England is prepared to expand its bond-buying QE programme (currently £745bn) if it is deemed necessary.

According to the Financial Times’ Chris Giles, today’s borrowing figures, do not include expected government costs: “The UK’s public finances have continued on a path towards a record peacetime deficit in 2020-21, with the central government borrowing £221.2bn in the first five months of the financial year to combat the coronavirus pandemic. Although that figure was lower than the Office for Budget Responsibility, the fiscal watchdog, had expected, the official statistics are yet to incorporate expected losses on government-backed loans to companies and £24bn of new spending for the NHS, vaccines and coronavirus testing the Treasury revealed on Thursday. The £221.2bn central government cash requirement between April and August was 11 times greater than the highest ever cash borrowing figure at this point in the financial year since equivalent records began 36 years ago.”

August’s borrowing reflects higher spending to tackle the coronavirus pandemic as over £10bn was spent on the retention and self-employment schemes in August.

Car Manufacturing Falls

Additionally, UK car manufacturing declined -44.6% in August with the ongoing coronavirus crisis making efforts to increase output more difficult as demand overseas has weakened. Production this year is down -40.2% with a loss of 348,821 units.

The Society of Motor Manufacturers and Traders has reported that the UK car manufacturing fell 44% last month compared with August 2019. Factories’ exports and domestic orders fell dramatically.

Mike Hawes, SMMT chief executive, said: “These are increasingly disturbing times for UK car makers and suppliers with the coronavirus crisis weighing heavily on the sector. Companies are bracing for a second wave with tighter social and business restrictions making the industry’s attempts to restart even more challenging.”

Are you a Business Transferring Funds Abroad?

If you are an exporter or importer and worried about your international trade costs, and the volatility of the British pound, you should get professional assistance when transferring funds abroad. Get in touch with Universal Partners FX to find out about efficient risk management and tailored solutions to your business’s transfer needs.

There are many incentives to buying property overseas, especially when you choose to buy your dream home in a place such as Portugal. From the beautiful countryside to its beach resorts and golf communities, Portugal has a lot to offer. For those investors who are looking for a good opportunity, the country’s low taxes and its strong rental market are key to seal the deal.

But how is the current property market, and how does Brexit and Covid-19 affect your buying plans?

The price of a property can be severely impacted by various factors such as the state of the economy, both in the country of residence and in the country you are buying in, as well as supply and demand. You might also want to consider that the investment you are making now will not be affected by the political climate in the specific country. 2020 has been a difficult year, as many countries, including the UK are still dealing with the effects of the coronavirus pandemic and the prospect of further lockdowns, while Brexit is still looming in the near distance.  The pandemic has deeply hurt economies and has inevitably hurt property prices home and abroad, making earlier investments seem more affordable now, which is not necessarily a bad thing.  

Brexit will accelerate the process of buying a home

British buyers are trying to secure their property abroad and their right to residency by buying before the Brexit deadline. Estate agents predict that the autumn will be a busy time for buyers dominated by higher property prices until the end of December, indicating that it is perhaps better to start your research now and ensure you do not pay more for a house you could have got much cheaper earlier.

Portugal, for example, has taken steps to attract British buyers, especially retirees by offering attractive tax schemes. Portugal is ranked the best country in the world for expatriates.

NHR Tax Status

In 2009, the Portuguese government introduced the Non-Habitual Tax Resident status (NHR) to attract high value residents, and it offered reduced tax rates and some exemptions for the first ten years in the country. Until recently, NHR allowed most foreign pension income to be tax-free. However, the 2020 Portuguese Budget introduced new changes to the NHR approved by the Portuguese Parliament on Thursday 6th February 2020. According to it, there will be a 10% tax on the foreign revenue of British pensioners and other foreigners who move to Portugal, with those living there before 2020 not being affected. If you already have NHR status or applied for Portuguese residence before 1 April 2020, when the new regime came into effect, you can still be eligible for exemptions on your UK pension income for the remainder of your ten-year NHR period.

No matter what, the tax is much lower than that charged in other countries such as the UK and significantly lower than the Portuguese income tax rates of 14.5% to 48%. It is still considered very attractive to foreigners.

The proposed changes come to address specific tax regimes and visa schemes that offer EU residency rights in return for property purchases. Retired Portuguese nationals and residents outside the NHR regime cannot access such tax breaks, there has also been pressure for change from within Portugal itself.

Whether low taxes or the Portuguese lifestyle itself seem appealing to you, real estate agents argue that now is the right time to buy and transfer your money abroad to complete your property purchase. They see that confidence will soon return to the market by the autumn of 2021 and that the first few months of the year will present an even bigger opportunity to buy.

If you are a British buyer, and want to secure a strong investment opportunity, now is the time to get in touch with your currency broker. A currency specialist such as Universal Partners FX can help you navigate the current market while taking into consideration your specific needs, goals and your budget.

When considering buying your dream home in Portugal, Universal Partners FX can give you peace of mind when sending money overseas. If you want to schedule ahead and safeguard your funds, talk to one of their foreign exchange experts today.

The pound was pulled from different directions yesterday, as on the one hand, the Bank of England hinting at negative interest rates pushed it lower, and on the other hand, positive Brexit news helped lift it.

The pound fell after the Bank of England said that it is considering how to use negative interest rates and it will discuss with regulators how to efficiently implement them. The pound dropped sharply after the announcement.

As quoted on Bloomberg, Valentin Marinov, head of foreign exchange research and strategy at Credit Agricole SA, said: “Negative rates are the nuclear option. It could ultimately push the pound into uncharted territory of losing whatever is left of its rate advantage.”

A Brexit Trade Deal is Still Possible

Despite the negative news, there was a glimpse of positivity on Thursday after the EU Commission President Ursula von der Leyen said that she remains "convinced" that an EU-UK trade deal is still possible, which helped the pound recover. Von der Leyen, speaking to the Financial Times, said: "I am still convinced it can be done. It is better not to have this distraction questioning an existing international agreement that we have, but to focus on getting this deal done, this agreement done - and time is short." Another EU diplomat said that "we should not overreact... We will continue negotiations because there are two separate tracks: one is the one which the UK has decided to violate, and the other is the future relationship."

If markets maintain a similar view that a trade deal is possible then the pound will be supported.

Bank of England’s Negative Interest Rate Surprise

After the Bank unexpectedly said that it was considering the possibility to cut interest rates to 0% or below in the coming months, to help support the economy, the pound fell.  There have never been any negative interest rates before in the UK and if the Bank moves ahead with changing the rates to record lows, this could really shake the financial system, especially due to the UK’s current account deficit. As Pound Sterling Live noted, this could leave “the UK's financial system, and Pound Sterling in particular, exposed to capital withdrawals from foreign investors.”

The shocking revelation was found within the Bank’s minutes to the meeting where it stated that it would start a "structured engagement" with the Prudential Regulation Authority in order to potentially cut interest rates to negative.

Senior market analyst at Western Union, Joe Manimbo said: "The U.K. Pound staged a swoon after the Bank of England dropped clear signals that it was edging closer to implementing negative borrowing rates. The big news was that officials were actively studying plans to push rates below zero given the ‘unusually uncertain’ economic outlook. Central bankers noted better data of late but signalled heightened concern related to Covid uncertainty, expectations of a sharp rise in unemployment and potential Brexit shocks."

However, some economists believe that the Bank will not push interest rates into negative territory and the recent news is part of the Bank’s research into negative interest rates rather than something more solid and definite.

But as Bloomberg said, a no-deal Brexit might just be the trigger for the BoE to use negative rates: “It’s becoming increasingly likely that if the economy is blown off course next year, the central bank could employ sub-zero rates.”

With the UK struggling to contain coronavirus infections, the imposition of new lockdown restrictions, unemployment and a disruptive Brexit could make the situation in the UK very difficult and push the Bank to make some hard decisions.

 

Are you Transferring Funds Abroad?

If you are worried about the possibility of a no-deal Brexit, and the British currency falling even further, you should get professional assistance when transferring funds abroad. Whether you are sending money to family or friends, paying employees overseas, or managing regular payments abroad, you need to protect your international payments’ budget from market volatility. Get in touch with Universal Partners FX to find out about efficient risk management and tailored solutions to your transfer needs.

 

The pound rose against the dollar on Wednesday, as the greenback was under pressure following the release of disappointing US retail sales figures for August.

The GBP/USD pair rose higher to weekly tops, despite the Brexit impasse and the latest saga with Boris Johnson’s Internal Market bill.

Wednesday's main event was the highly anticipated FOMC monetary policy decision - where rates look set to remain stable at near zero - and updated economic and inflation projections, ahead of Thursday’s BoE meeting. Due to the key FOMC event, trading opportunities and volatility around the GBP/USD currency pair might arise ahead of the event.

Brexit

The pound was also supported after Justice Secretary Robert Buckland hinted the Government could amend the Internal Market Bill in order to compromise with Tories criticising the PM for breaking an international treaty and avoid a rift within the Conservative party. The government’s change of heart could help soften the EU’s stance and resume negotiations with the EU.

Buckland said that the original plans in the Bill could be made "acceptable to all Conservative colleagues".

With investors digesting the political reality and remaining confident that a deal is still possible, the pound was lifted after the initial news of the Internal Market bill.

"Outsized moves in GBP ... have injected a sizeable risk premium in GBP. It's now trading at a decent discount on our short-term valuation, underscoring that some of the recent Brexit news has already been priced in. At the very least, this backdrop suggests that in the coming weeks GBP would benefit more from good news rather than sink further on bad news. We still expect more volatility but risk/reward favours taking profit at these levels," said Mark McCormick of TD Securities.

Bank of England Policy and Interest Rate Decision on Thursday

The Bank of England will try and assess on Thursday the UK’s economic recovery and whether it needs to adjust its policy to offer more monetary support. For many economists, now it is not the right time to make significant changes to its package. Adding to the Bank’s woes about the UK economy comes the UK inflation which fell to its lowest level in nearly five years, to an annual 0.2%, far away from the Bank’s official 2% target.

The Bank is expected to take action in its November meeting, as the economy slowly recovers. According to the Organization for Economic Cooperation and Development forecast released on Wednesday, UK gross domestic product would shrink by 10.1% this year, while the economy is forecast to rebound in 2021. Given the political and economic uncertainty, the BoE will possibly wait and see what kind of fiscal stimulus is necessary to support the economy. But Reuters noted that “While the central bank is widely expected to hold fire, policymakers are likely to conclude that downside risks to the economy are rising for the economy due to rising Brexit uncertainty and renewed restrictions on social activity.”

Are you Transferring Funds Abroad?

If you are worried about the possibility of a no-deal Brexit, and the British currency remaining sensitive to Brexit uncertainty, you should get professional assistance when transferring funds abroad. Whether you are sending money to family or friends, paying employees overseas, or managing regular payments abroad, you need to protect your international payments’ budget from market volatility. Get in touch with Universal Partners FX to find out about efficient risk management and tailored solutions to your transfer needs.