Early morning trading saw the Pound experience further losses against the Euro, as Brexit headlines once against took centre stage in investors’ thoughts.
Celebrating his first four weeks in office today, Boris Johnson this week will be making trips to meet German Chancellor Angela Merkel on Wednesday and French President Emmanuel Macron on Thursday. This is an attempt to try and convince his EU counterparts to renegotiate the UK’s deal to leave the European Union by 31st October.
Ahead of the meetings, the Prime Minister also wrote a letter to the President of the European Council Donald Tusk, to list his demands required for Brexit deal. This includes the removal of the Northern Irish backstop, and avoiding his threat of a ‘No Deal’ Brexit.
Boris Johnson’s four-page letter was quickly knocked back by Mr. Tusk who tweeted: “The Backstop is an insurance to avoid a hard boarder on the island of Ireland unless and until an alternative is found”. As has been the case throughout this long drawn-out process, the EU are showing no sign that they are prepared to renegotiate the Brexit deal with the UK. This is despite the new leadership from Boris Johnson and his continued threat to leave the EU in 72 days’ time.
The new Prime Minister is also fighting threats to his leadership, with both leading opposition parties outlining their plans to lodge a vote of ‘No Confidence’ as soon as MPs return from the Summer recess on 3rd September. Boris Johnson remains defiant that MPs cannot stop him from pushing through a No Deal in October. Even with a vote of no confidence, the PM will call for a Snap Election after the 31st October, thereby avoiding MPs’ ability to stop the ‘No Deal’ process.
What lays ahead in the coming weeks is probably one of the most uncertain times in UK politics for some time. With so much at risk, the Pound has struggled to withstand further losses against even a volatile Euro.
Euro forecast: Italy’s PM Conte resigns
This afternoon, the news from Italy did temporally at least take the spotlight away from the UK and Brexit. Italy’s Prime Minister (PM) Giuseppe Conte resigned, shifting the attention back to the Eurozone’s third largest economy. Mr. Conte continued his war of words with his Deputy Prime Minster Matteo Salvini and leader of the far-right League, calling him an “opportunist” for triggering a government crisis that could have serious consequences for Italy.
By resigning, Mr. Conte has avoided the threat of a ‘No Confidence’ vote sought by the far-right League. This turmoil in Italy put pressure back on the Euro and allowed the Pound to rise to 1.0989, nearly matching last week’s high, which was the Pound’s highest level seen since 1st August.
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