GBPEUR: Barclays CEO Sees Brexit Boosting the City

A Rollarcoaster Week for GBP EUR - Weekly Review June 18th 

The GBP to EUR exchange rate was trading slightly lower as the market awaits the latest US jobs numbers. The pound soared yesterday after the Bank of England held its key interest rate at 0.1% and rejected any further stimulus in the near-term.

Barclays Plc’s Jes Staley has talked up the City of London’s chances after Brexit and it’s a 180 degree turn for the banking institutions who talked of doom in the event of a separation.

GBPEUR was trading around the 1.1425 level and has the April-May 2020 highs of 1.1500 in its sights.

Brexit will benefit the UK says Barclays CEO

The CEO of Barclays, Jes Staley, has said that Brexit will ultimately be a net benefit to the City of London and its status as a financial centre.

The banking executive said the country’s freedom to chart its own course would allow it to compete with America and the rise of Asian financial hubs.

“What London needs to be focused on is not Frankfurt or not Paris. It needs to be focused on New York and Singapore,” Staley said.

The CEO said that the UK’s ability to succeed post-Brexit will depend on its ability to attract investment capital. He also talked up the advent of green finance as a new area where the UK can attract investors.

Staley’s comments are far removed from the talk of business executives during the referendum, and also in the post-vote talks, where politicians fought to overturn the result.

Bank of England holds off on stimulus, oil hits $60

The price of oil has risen with the commodity now hitting $60 on Friday. The move comes as traders react to the recent global growth upgrades from the IMF and the move of vaccination efforts. The current lockdowns are a headwind for oil demand, but traders are looking beyond that and the Bank of England was positive for the hopes of a Q2 rebound in Britain’s economy.

The bank held interest rates at record lows as was expected, while they also held back on any further stimulus. This gave traders the green light to buy sterling into the weekend.

The issue for the central banks going forward will be how they can manage inflation as economies reopen. Eurozone inflation jumped to 0.9% this week after being stuck in deflationary territory and this is happening as the key economies are in strict lockdown. The problem for banks will be how to contain inflation without raising interest rates too far and squeezing government budgets.

The governments of the UK and Europe have added large amounts to their debt piles and this will be a headache for policymakers if the lockdowns are removed in the first quarter.