The GBP EUR exchange rate was -0.07% lower as the EU continues to take action over the Northern Ireland protocol. The latest move was to draft legislation aimed at strengthening its ability to respond to changes in the agreement. The largest rail strike in 30 years weighs on the pound sterling with the economy likely to be affected as millions of workers are stranded.
The GBP to EUR is still holding the support at 1.1650 and that should provide upside this week.
EU looks to strengthen its position on protocol
The EU drafted new legislation that will aid the bloc in its fight against UK amendments to the Brexit Agreement and EU-UK trade deal.
Fine Gael MEP in Ireland South Sean Kelly is the lead author in finalising the draft legislation, which will deal with retaliatory action if one side breaks its obligations.
“So basically, we will put on the table the steps that will be taken if they continue down this path and allow the Commission on how to do it,” Kelly said.
“They will see that there’s no messing here, we’re not bluffing, that once you cross the rubicon, there are consequences.”
Kelly also called the UK under Boris Johnson “an unreliable diplomatic partner,” and that the EU needs tools to respond.
The protocol issue is dragging on the pound sterling versus the euro. However, Wednesday’s inflation rate for the UK is likely to control the pair’s direction this week.Expectations are for a rise in inflation to 9.1% from 9% but the BoE has already said that 11% inflation is their target.
Europe faces winter energy crisis with the rush to coal
The energy crisis in Europe could worsen in the winter with the largest customers for Russian gas now looking for alternative sources, which include burning more coal. According to BBC News, Russia lowered its supply into Europe on Monday, with Italy’s Eni saying that it would only be receiving part of its order for gas.
Dutch futures for gas prices are now trading 50% higher since the start of the year. They could continue to rise into the winter as fuel stocks dwindle.
Germany said that a move back to coal power could add up to 10 gigawatts of capacity to defend the loss in supply. Russia attributed the gas supply drop to maintenance issues. However, Europe remains sceptical, facing a troubled winter.
The UK is also facing another dose of economic pressure with the biggest rail strike in 30 years set to start on Monday night. The strikes will also include the London Underground on Tuesday as the country’s rail network grinds to a halt.
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