Weak UK economic data and comments from Barnier cause the Pound to lose value
Sterling has weakened against the majority of major currencies following a host of unfavorable UK economic data releases on Friday. Trade balance figures was released and there was an increase in deficit to £13.6bn. This can largely put down to an increase in oil price.
There was also a significant fall in Industrial Production which showed a fall of 1.3%. This is the largest fall in over five years which does not bode well. There was however an increase in manufacturing figures, it was the eight consecutive month of growth.The main catalyst for the Pound weakening however were comments from Chief EU Negotiator Michel Barnier warning that a post-Brexit transitional deal is “not a given”. He mentioned that the EU and the UK are struggling to agree on several points which are jeopardising the deadline of March put in place to give the public much needed clarity on the current state of negotiations.
The biggest points of contention are lifetime rights of residency to EU citizens who arrive following Brexit , but before 2021 and having to conform to new EU laws with the UK having to like it or lump it with no power to negotiate.
Boris Johnson is set to speak on Wednesday outlining the road to Brexit and to try and unite remain and leavers. I find this ironic considering his stance pre Brexit and the way he fueled separation and xenophobia for his own political agenda. There are speeches ongoing over the next few weeks in regards to Brexit which could create volatility.
Last week’s trading levels shows the fragility of the Pound. We saw Sterling rise to 1.1451 against the Euro following the increased probability of a rate hike by the Bank of England (BOE) and then saw it fall as low as 1.1251 during today’s trading. You would be wise to have an experienced broker on board to make sure an opportunity is not missed.
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