The pound is going through another volatile period after two major pieces of news served to push and pull the currency. It went up after the European Union and UK agreed terms for a Brexit transition period (19 Mar), before falling after inflation numbers came in lower than expected (20 Mar).

Business group CBI welcomes the progress on Brexit. Director general Carolyn Fairburn says: ‘Agreeing transition is a critical milestone that will provide many hundreds of businesses with the confidence to put their contingency planning on hold and keep investing in the UK.’

The transition phase will last for 21 months through to December 2020. However, the deal is contingent on remaining areas of contention around issues like Northern Ireland being resolved by the time the final withdrawal agreement goes to the UK and EU parliaments for approval in the autumn.

It is therefore debatable whether the corporate world will have genuine certainty until then.

The bigger than expected drop in UK inflation from 3% in January to just 2.7% in February subsequently put sterling under some pressure as it is perceived as reducing the likelihood of an interest rate increase from the Bank of England at its May meeting. (TS)

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