Brexit progress this week is good for sterling

Pound sterling has enjoyed a minor boost and increase in value against the euro this week as it appears that the prospect of a ‘no-deal’ or hard Brexit is diminishing as negations between the UK and EU reportedly make progress. Of course, there will be more uncertainty coming in the weeks to come and major issues have yet to be resolved.

And don’t forget it’s been little over a week since the British government was taking about what would happen in a hard Brexit scenario. We wrote about the specific issues related to ecommerce and marketplace merchants, especially regarding VAT, imports and exports, last week.

There are several causes for optimism that have emerged over the last day or two that do change the outlook on several levels. The first is the news that the EU is willing to consider a special status for the UK, distinct from the Norwegian and Canadian models that represent the two extremes of possible future arrangements. Secondly it has been signalled that there may be a “measure of flexibility” in the timetable.

The EU’s chief negotiator said yesterday that the aim was “a partnership with Britain such as has never been with any other third country” with the bloc. But he was keen to clarify later in the day that this has been on offer all along:

We have been willing to form a strong relationship from the beginning,” Barnier told the station. “Twenty-seven heads of state and government, including Angela Merkel and the French president and other heads of state, have proposed a unique partnership with the United Kingdom.
– Michel Barnier, chief negotiator, European Union

Regarding the timetable, the previous deadline for a broad brush agreement on major issues was expected to be a summit of EU heads of government in October. Barnier has signalled that this isn’t set in stone and, if more time is needed, then that can happen.

Any measure of clarity on the central issues will be most welcome and hopefully the first bit of certainty will be confirmation from the UK and EU that will be a deal of some kind and not a hard Brexit. That should give sterling a good boost.

Any boost in sterling is an opportunity to utilise a specialist broker and lock in a decent rate with the use of a ‘forward contract’. Earlier this year we published an ebook in association with Currencies Direct that addresses these issues called Harnessing volatility: Maximising profitability on international ecommerce sales. You can download it for free.