The GBP EUR exchange rate was lower by -0.47% on Tuesday as nerves set in over the Bank of England’s rate hike decision this week. The pound slipped despite disappointing retail sales from Germany and an improvement to UK PMI. The UK’s spat with France over fishing rights is also ongoing.
The GBP to EUR was trading at 1.7820 ahead of Thursday’s BoE decision.
UK will not ‘roll over’ to ‘unreasonable’ French demands, Truss
The UK will not “roll over” in the face of “unreasonable” threats from French President Emmanuel Macron, said Foreign Secretary Liz Truss said.
Her comments come amid a continued fight over fishing rights, highlighting again that the Brexit agreement was not much of an agreement.
Macron has warned that unless the UK made a “significant move” to ease the dispute over fishing licenses in British waters, Paris would introduce strict port and border checks from Tuesday. Ms Truss responded that the UK would trigger dispute resolution measures in the Brexit trade deal to seek “compensatory measures” if the French administration followed through on those threats.
The fishing row adds to the recent tensions surrounding UK-European Union relations, with the dispute over the Northern Ireland Protocol also causing a row with Brussels.
The latest dispute with France was caused by decisions made by Britain and Jersey over licences for small French boats to operate in UK waters. Officials argued permission can only be given to vessels which demonstrate a history in the waters.
ISM: Manufacturers hit by unprecedented supply chain hurdles
Former Bank of England Chief Mark Carney is supporting Boris Johnson as a finance adviser at the COP26 summit and had a warning for aggressive planners.
The supply chain currently affecting UK manufacturers could last until the second half of next year, warns Martin Beck, senior advisor to the EY ITEM Club.
“After falling for four successive months, the manufacturing PMI edged up from 57.1 in September to 57.8 in October. But digging into the detail, the picture was more mixed. On the plus side, growth in new orders and employment strengthened. But with firms reporting production increasingly disrupted by severe capacity constraints and shortages of inputs, manufacturing output growth slowed to an eight-month low and was barely in expansionary territory.”
Fhaheen Khan, senior economist at manufacturing group Make UK, warned that rising energy costs could force some factories to shut down over the winter.
“Shortages in labour, a supply chain crisis and input costs rising at record rates continue to hamper manufacturers who are being stalked by the after-effects of a post-pandemic boom and a new trading environment. Though the latest data is an improvement, the data masks the true nature of the situation which is partly a reflection of higher stock building to prepare for the cold months ahead.”
The supply chain issue has affected both the pound and the euro but the problems are not easing quickly.
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