Boris Johnson flies to Berlin to meet Angela Merkel
Although there is some important economic data due for release this morning, the main event today is likely to be the meeting in Berlin between German Chancellor Angela Merkel and UK Prime Minister Boris Johnson.
As covered on Pound Sterling Forecast recently one of the main topics of discussion that holds the potential to influence pound to euro exchange rates at the moment is the Irish Backstop arrangement. Adding to this is the No-deal Brexit possibility which is increasing as we get closer to the Brexit due date which is the 31st of October this year. There have been some comments out of Europe recently alluding to the potential for a softer stance on the Irish Backstop and this has provided the pound with a slight boost. This has helped the GBP/EUR exchange rate climb closer to 1.10, although the pair have been trading below this key benchmark since late July which was almost a month ago.
The subject of the No-deal Brexit along with the Irish Backstop is bound to come up in the meeting today between the two leaders, so I would expect any major announcements to have the potential to influence pound to euro exchange rates.
Italian political uncertainty rocks the Euro
There was also some market movement from the euro yesterday which helped the GBP/EUR rate see a boost. The Italian Prime Minister, Conte resigned yesterday as the League party pulled out of its coalition with the Five Star Movement. There appears to be a lot of tension within Italian politics at the moment and this along with the issues surrounding the Italian Budget and high levels of debt compared to GDP could present issues in future. This is perhaps why we saw a sharp sell-off in the euro’s value yesterday afternoon.
Aside from the political issues described above, the UK public finance figures released this morning will offer an insight into how much room the current government has to loosen fiscal policy. So this release is also worth following. If you would like to learn more or would like to save money for an upcoming currency transfer compared to using your high street bank, feel free to contact one of our currency specialists using the form below.