The British Pound starts the new month with a positive bias against the Euro, U.S. Dollar and other major currencies, with foreign exchange markets showing an ongoing confidence that a 'no deal' Brexit will be avoided at the end of the month.
The Pound-to-Dollar exchange rate at 1.2296, up a more restrained 0.10% owing to broad-based Dollar strength. Despite the solid start to the month, Sterling is still well below the highs achieved in September, and we see little reason to believe the current environment offers much by way of sustainable and meaningful gains, particularly as the prospect of a Brexit deal being struck between the EU and UK looks highly unlikely.
GBP is still trending lower from its September 20 high and more weakness expected, those with currency transfer requirements who are looking to lock in current levels in Sterling ahead of any potential downside heading into the crucial October period are able to secure GBP/EUR rates around 1.1230 and GBP/USD rates around 1.2230 with independent currency providers, while margins on transfers from bank accounts are quoting notable lower for both pairs.
The Irish border developments come as Prime Minister Boris Johnson seeks to deliver a Brexit deal as a way to avoid having to ask the EU for another Brexit extension come the end of October. A Brexit deal remains the clearest path towards a sustained recovery in the value of Pound Sterling, a delay would only offer more sideways trade in the currency.