Over the last week the sterling has been fighting back against the euro and mid-market exchange rates have dropped from 0.9166 to 0.899. At the time of writing this article. Chief Economists for the Bank of England Andy Haldane comments last week regarding a potential V shaped recovery for the UK economy can be argued as one of the key talking points last week. However, the Bank of England employee on an online talk yesterday for Buckingham University stated he expects further waves of COVID-19 and how the UK deals with it, will shape up the direction of the economy.
Today the Brexit negotiations will continue between EU negotiator Michel Barnier and UK negotiator David Frost. Early reports are suggesting that there has been a slight breakthrough regarding fishing rights as the EU have hinted towards allowing the UK to have a higher share in fish caught in surrounding UK waters. This comes after Boris Johnson warned Angela Merkel once more that the UK are prepared to leave without a deal, which would cause serios problems for the UK pound. The negotiations will continue today and if finally, both the UK and EU admit there has been a breakthrough, the euro could continue to decline against sterling.
Not all Positive News for the Conservative Government
Just as it appears that sterling could start to claw back losses against the Euro, the Sottish Government led my Nicola Sturgeon has announced that they will defy the proposed UK legislation surrounding food and environmental standards, and this story could be set for the high courts. The standards the EU set a re extremely high and Scotland are concerned that once the UK leaves the EU, the UK Government will force Scotland into the same rules as England and essentially food standers and environmental standards will decline. At present this hasn’t had a major impact on exchange rates however this could become a serios problem for Boris Johnson in the months to come.
Rishi Sunak to Take Centre Stage
Today Chancellor Rishi Sunak will address the UK public, in a bid to give clarity on the future direction of the UK. Last week a leaked reported suggested that the Chancellor will scrap stamp duty at the Autumn budget in a bid to stimulate the economy. Many market commentators have stressed that if this is the plan, then the cut will need to take place today and not in a few months as the property market will go stagnant until the Autumn budget. The Times this morning are reporting that the Chancellor will bring forward the cut today, which could be seen as a positive for the housing market.
One problem that the Government have on their hands is mass youth unemployment. Now that we are coming towards the end of the furlough program and employers will have to start contributing to employees’ wages, the chances that unemployment is going to rise is extremely high. Numerous reports are suggesting that The Chancellor today is therefore going to put forward a £2 billion pot for work placement schemes for people under the age of 25.
Other topics that could be discussed today are a VAT cut, £500 for people to spend on the high street and vouchers for people to insulate their homes in time for the winter.
If you are converting euros and pounds in the upcoming weeks for business or property purchases, feel free to get in touch for further information regarding the market and our live exchange rates.