WHAT CAN WE EXPECT IN 2020 FOR THE POUND?
In this report, we look at the factors that may affect GBP exchange rates going into the New Year.Request a quote
The pound is finishing 2019 in a stronger position than at some of its lower points of the year, but has notably given up many of the gains established since the election from this month. This is in part down to the remaining potential for a no-deal Brexit to be the final outcome, should Boris Johnson and his team fail to negotiate a deal with the EU.
The clock is ticking on that proposition, as some commentators predict that any deal with the EU will need to finalised sooner than later, in order to prevent an extension to the December 2020 transitional date. In any event, Boris has made very clear that this date will not be extended and that the UK will leave by this date.
Judging by the last 3 ½ years, an increased prospect of a no-deal exit from the EU has seen the pound lose value, since the market has less faith in this being a suitable outcome. For so long as no-deal is a possibility, the potential for sterling to come under pressure remains and it seems that this will continue to be a point of discussion for the pound in 2020.
In other areas to look at for 2020 and the UK economy, RICS (Royal Institute Chartered Surveyors) are predicting house price growth of 2% in 2020. Such news may help to improve the market and increase other economic activity, as a rising housing market benefits other areas of the economy such as construction and services, as more properties are sold and homeowners have more wealth.
Brexit appears likely to continue to be a defining feature for sterling in 2020, and with it comes the uncertainty of sudden changes and a market notoriously difficult to predict, as currency market reacts to various headlines and speeches which might sway sentiments one way or the other.
If you have a transaction to consider in 2020 or sooner, you may wish to speak to our team. FCD will be open today until midday, reopening on the 27th , 30th and 31st until 2pm, before resuming normal opening hours on the 2nd January.