Boris Johnson and his cabinet preparing for no deal Brexit
The sensitivity of GBP/EUR levels to the latest news in the currency market was highlighted again today, with the news over the weekend that Boris Johnson appears ever ready for no-deal Brexit, adding to an increasingly uncertain mood for the pound. No amount of positive rhetoric from the new British PM appears to be calming investors nerves over the damage no-deal will do to the economy ahead.
After rebounding against most currencies last week, the pound has fallen in value as we begin this week, with the market trying to price in once again the possible outcomes on Brexit. This week could also be testing for the pound with the latest UK Interest Rate decision due on the Thursday, alongside the Bank of England’s Quarterly Inflation Report.
UK Bank of England interest rate decision
These data releases have the potential to move the pound and have historically been seen as a more volatile type of release on the economic calendar. In terms of what will drive the currency market, changes in monetary policy by a central bank can have a large impact. The possible changes ahead for the Bank of England could move the market, some commentators are predicting the Bank of England will need to cut interest rates in the future. Any comments on this subject or any deterioration in the UK’s economic outlook, (according to the Bank of England) may by historical performance see the pound lower.
Other news to consider this week on the pound to Euro rate will be any signs that the ECB (European Central Bank) will be looking to cut interest rates in September. The currency market has been keeping an eye on the Euro with regard to recent increased expectations that the ECB will be cutting interest rates in the future. Expectations are currently around a 0.1% cut in September, as economic data for the Euro is released it may be seen in relation to this news. This week on the 31st is Unemployment and GDP (Gross Domestic Product) data, any of which may be a market mover by changing the outlook for the Eurozone economy.
Thank you for reading and please contact me with any questions or queries regarding any GBP/EUR transactions.
