London RationalFX

RationalFX : Brexit uncertainty holds back sterling

RationalFX : The pound initially edged up on Thursday after Rishi Sunak’s announcement of stimulus to kick-start the British economy. However as the day progressed, Brexit risks and general uncertainty weighed on the pound …

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Chancellor Sunak promised an additional thirty billion pounds worth of measures to help the coronavirus-stricken economy, with particular emphasis on getting furloughed employees back to work, a cut in the VAT rate for certain sectors and a temporary scrap of the stamp duty tax on properties with a value of up to £500,000. Initially there was little reaction to these measures, but investors reacted yesterday in kind to these dynamic fiscal measures.

Despite this, the pound is unable to break free completely and the Brexit question is still hanging over the pound. Tuesday saw a new round of talks begin and uncertainty remains extremely high. Key figure German Chancellor Angela Merkel has spoken of her intention to seal a deal by the December deadline, but she is not ruling out a no-deal outcome and has urged the EU and member states to prepare for this.

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