If you plan to buy Euros, it may interest you to know that the Pound fell to 1.0720 against the Euro on the interbank exchange over the weekend, a near 10-year low, before making a small recovery during the opening hours of the trading week on Monday morning.
Euro forecast: Could a no-deal Brexit become a reality?
With the continued worry of a Brexit no-deal becoming a reality by the next deadline on 31st October, newly-appointed Prime Minister Boris Johnson has promised to lead the UK out of the EU with or without a deal. It should be noted that, although Boris Johnson has refused to take the no-deal option off the table, he has said his preference remains to restart negotiations with the EU and agree a deal.
However, Boris is insisting that the EU must withdraw the problematic Northern Irish backstop from the agreement altogether. So far, the EU have given little-to-no indication they are prepared to bow to any of Boris Johnson’s immediate demands. This is leading to a growing belief that the UK will exit the EU without a deal, if Mr. Johnson is to fulfil his promise.
If the EU refuses to back down, the Prime Minister will not have a straightforward task to fulfil the no-deal option. Despite being less than four weeks into the job, Boris Johnson is already facing difficulties keeping his place at 10 Downing Street.
Opposition leader Jeremy Corbyn has argued that the UK cannot be allowed to leave without a deal, and that the PM cannot delay an increasingly-likely snap general election until after the 31st October. Mr. Corbyn is ready to call a vote of ‘no confidence’ as soon as MPs return to work from the summer recess on September 3rd.
Pound volatility since Boris Johnson’s appointment as PM
Since Boris Johnson’s appointment on 22nd July, the Pound has depreciated by -3% against the Euro. This highlights the continued difficulties the Pound has faced since the PM’s appointment last month.
The Pound has managed to make some small gains against the Euro today, reaching a day high of 1.0818 on the interbank exchange. This was helped by some positive UK jobs data released this morning. Wage growth in the UK reached an 11-year high in June, while the employment rate matched the joint-highest level reported since 1971, according to official figures.
Wage growth has risen to 3.9%, impressive when compared to the current inflation reading of 2%. This provides evidence that UK consumers should have a greater disposable income. Meanwhile, the estimated 76.1% employment rate was the best since comparable records began.
Today’s positive data was further evidence of how mixed the UK’s economic data has been lately. The previous big data release, last Friday, showed that the UK economy shrank by -0.2% in the second quarter of the year, the first contraction since 2012.
With the mixed economic performance and the continued Brexit uncertainty, it is easy to relate to the Pound’s current difficulties. Which way Sterling will move going forward will depend on the news and data ahead. To be kept up-to-date, please feel free to get in touch for an update. You can email me directly here.