I hope you all had a wonderful festive period and new year- trading resumed last week but I thought I would leave it a week before I wrote my first report of 2019 as the first week is generally quiet- oh how I was wrong! In the first week of January, we have already seen a lot of volatility on exchange rates, including a flash crash which brought the GBPUSD exchange rate down to 1.24 and GBPEUR down to 1.09!

Now markets have stabilized again- it is now time to look at what events are ahead of us that could potentially move the markets- usually around this time of the year I put together a long-term forecast for the Pound, but as there are too many variables between now and March, it makes more sense to play things by ear, as one political move could change the trajectory completely.

The main event ahead of us is the Parliament vote on Theresa May’s Brexit deal- there has been much speculation (again) about whether she will let the vote go ahead or not, but on Sunday, The Prime Minister stated that the vote will go ahead despite any other speculation. Personally, I still wouldn’t bank on this, she has said this before and changed her mind last minute.

Currently, the outlook is that the deal will not get voted through Parliament, which currently means that the UK will opt for a no-deal scenario for Brexit- however as much as the EU are saying they will not renegotiate, we still cannot rule that out, or the fact that the March deadline could potentially be extended further to find a deal that works for both sides.

It is worth remaining cautious over the next two weeks if you have upcoming payments to make, the vote will take place on the week of January 14th- but in the lead up we may see news from Parliament which will give us an indication of how the vote could go.

Now looking across the pond, the US Dollar is expected to now start weakening off slightly,  and as long as a no deal scenario doesn’t happen in the UK, then GBPUSD exchange rates are expected to go back over the 1.30 area this year and potentially move close to 1.40 by the end of the year, however this forecast can be null and voided if we do enter a no deal scenario with Brexit.

Most of you know that at the beginning of every year I like to sit down with the businesses I work with to go over your risk/exposure on the FX markets to identify strategies which can potentially save you money over the year- if you would like to schedule a consultation please don’t hesitate to contact me.