Today was the start of the EU summit in Brussels and no surprises the commentary coming from the EU is that progress needs to be made. Irish leader Leo Varadkar told the press that the progression made so far is disappointing and expected other fellow leaders to send the same message. However, UK Prime Minister Theresa May has responded by suggesting very good progress has been made but with the pound falling in value throughout the day, it appears investors agree with the Europeans.
Tomorrow the all important Brexit talks are set to begin and the UK Prime Minister is set to brief the 27 other leaders. This will be the last meeting before October, when the UK should technically be finalising a deal. At present it doesn’t look like Theresa May’s address will outline any new information therefore I expect this to provide further uncertainty and the pound to fall further against the euro.
Also tomorrow, the UK will release their latest GDP numbers. The only saving grace for GBPEUR exchange rates is that the Bank of England have hinted towards an interest rate hike as early as August, therefore the GDP numbers will be watched closely by investors. If the revised quarterly numbers exceed expectation you would think an interest rate hike is likely. However, I find it difficult to see how GDP has risen therefore I expect the release to be 0.1%. Anything lower could cause a major drop in GBPEUR exchange rates.
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