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.

Buying a property abroad can be difficult especially with the likelihood of a no-deal Brexit. But considering the advantages and disadvantages, and doing your own research wisely, you will be able to buy a property without throwing your life savings away. It will be good to discuss your property purchase with a currency specialist who will help you understand the market and offer assistance when making large or regular international transfers. This will be significant particularly due to the current political chaos in the UK. On Wednesday, Merkel gave the prime minister an ultimatum to find a solution with regards to the Irish backstop, as the pound slipped to low levels, close to the ones seen back in January 2007.

Brexit

In his meeting with Merkel, Johnson accepted the German Chancellor’s "blistering timetable" admitting that it was the UK’s burden to find a solution to the political deadlock. In his familiar humorous style, Johnson repeated Merkel's campaign slogan "Wir schaffen das," or "we can do it," causing laughter among the Chancellor and reporters.

In a Bloomberg article, it was reported that after Boris Johnson’s letter to EU officials, the French government now expects the U.K. to leave the EU without a deal, something that would immediately install border controls at the end of October.

The article notes that with Johnson becoming prime minister, EU officials believe that a no-deal Brexit would be the most likely outcome, as the UK “doesn’t have a realistic plan for an alternative to the backstop. The measure is despised by ardent Brexiteers in Johnson’s Conservative Party because it keeps the U.K. tied to many of the EU’s customs and trading rules, and Parliament has rejected the Brexit deal three times.”

Buying your dream or retirement home

Despite the political deadlock in the UK, if you have made your research and you are certain about moving abroad and purchasing your dream home, then there’s a few things you need to have in mind.

First, you should research the area of your desired property and find out the benefits of living in that neighbourhood. Are there any amenities nearby, is there access to the beach or the motorway, and generally, what is the atmosphere and feeling of the area and community? You will have to live there and, perhaps, in the future, sell the property with significant returns. So, trying to get the best deal for the best location will definitely enhance your investment in the future.

Make sure that you are not buying something you have never seen in person before. In the case that a developing company will take care of the construction of the building, but you have only saw the plans, do your research beforehand and find out whether the developers are reliable. Having a contract that guarantees that by the end of the project you will get what you were promised is the most secure way to safeguard your interests. Not only foreigners, but locals have fallen in the trap of buying a property but not the land is on, resulting in court cases and lots of stress.

Talk to the experts

From currency exchange brokers, to mortgage brokers and lawyers you will need specialist help when deciding to relocate and purchase a property abroad. In this sense, you will need to factor in costs for legal advice, taxes, notary fees, utilities, such as electricity, water, and gas connections.

Buying a property in France or Italy, 10%-12% of the property’s purchase price would go to cover government taxes and legal fees, while in Spain can go up to 12%-16%.

If you are buying property abroad, it is very important to go to a specialist such as Universal Partners FX. With the current volatility and weak pound, it is best that you contact a currency specialist as soon as you start the buying process, so that you get the best exchange rates possible and pay the minimum amount of fees. UPFX conduct in-depth market analysis, use state of the art technology and can offer access to the best exchange rates available. Get in touch with them today to find out how much you can save on your currency transfers.