Moneycorp's Sterling Review 2019

10 January 2020

It has been a year of ups and downs for sterling, mainly dominated by political and geopolitical factors. Investors’ concern over the outcome of Brexit largely overshadowed the economic statistics, which were seen through the lens of uncertainty relating to the UK’s pending departure of the EU.

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What’s ahead in 2020

Sterling leapt higher after the Conservatives delivered a significant majority in Parliament, suggesting that progress on Brexit and domestic policy will be possible after an extended period of stagnation. The pound hit a three-year high against the euro and almost a two-year high against the US dollar despite the market having already priced in a win for the Conservatives. The PM’s first move was to push a bill which prevents further deadline extensions. This caused the pound to waver. In the coming year, the market will be watching political developments closely, particularly given Boris Johnson’s sometimes idiosyncratic approach to leadership which may make developments difficult to predict. If the Brexit issue gets resolved, there may be a renewed ocus on domestic economic performance and the actions of the Bank of England, as well as greater scrutiny of other significant influences to world trade and currency values including the US-China trade war. 

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