The pound weakened against the euro and the dollar yesterday, heading to its biggest slump in six weeks against the greenback on renewed fears of a hard Brexit. Clashing statements from both the EU and the UK have cast doubt over the success of upcoming negotiations. Sterling remains weak this morning.
EU chief negotiator, Michel Barnier, said in Brussels yesterday that a ‘highly ambitious’ trade deal is available to the UK if it agrees to the EU’s rules. During a speech in Greenwich not long after, the Prime Minister rejected this, saying that there is ‘no need’ for Britain to follow Brussels’ rules.
Johnson also raised the prospect of returning to World Trade Organisation terms if the EU refused a Canada style trade agreement. This would involve leaving the EU at the end of this year without a trade deal.
UK manufacturing PMI was revised higher yesterday to 50, bringing the figure out of contraction territory and showing the strongest reading since April. However, unfortunately this did little to move the pound. This morning, construction PMI will be released, which is expected to show a slight improvement month on month.
