GBP Monthly Review September 2018

Chancellor Philip Hammond voiced fears GDP could fall by 10% in the event of a no deal Brexit. Theresa May later commented that a no deal Brexit “wouldn’t be the end of the world”, sending Sterling lower.

Sterling lost ground steadily versus the single currency in August. Making a low of 1.0990, its lowest level in nearly a year. A sustained break of 1.10 leads many to fear a drop to parity.

Following the hike in rates by the BoE, inflation data showed that prices rose for the first time in a year. This, to a certain extent, justified the hike in rates.

Following comments by Trade Minister, Liam Fox, and BoE Governor, Mark Carney, fears of a no deal Brexit are mounting as neither side displays any urgency.

The relative peace from Government infighting and political squabbling is set to end as Parliament returns from its summer recess on September 4th.

Sterling’s relatively steady summer is likely to end as it comes under pressure from Brexit and faltering economic conditions.

Ex-Foreign Secretary, Boris Johnson’s summer may have been spent plotting the downfall of his erstwhile boss and a leadership challenge may be forthcoming.

Brexit talks resume in Brussels with the EU likely to “gently” reject Theresa May’s Chequers proposals. Despite being encouraged to continue to seek a solution this may be the catalyst for a hardening of the UK’s attitude.