The pound weakened to five-month lows against the euro yesterday as Brexit continued to weigh. Worries over the progress of trade negotiations between the UK and EU are driving the pound lower.
After the UK government introduced a the ‘Internal Markets Bill’ earlier in the week, the EU called for emergency talks yesterday. Apart from changing parts of the Withdrawal Agreement and breaking international law, EU executives said that trust between London and Brussels has been “seriously damaged” after the introduction of this bill.
The EU is now demanding the UK abandons plans to change the Withdrawal Bill “by the end of the month” or risk jeopardising trade talks. There could be further updates on the progression of talks from both sides today.
A series of data releases came in for the UK this morning. Balance of Trade figures show that the UK’s trade surplus narrowed in July, whilst industrial production surged 5.2% month-on-month. The GDP 3 month average shows that the UK economy shrank 7.6% in the three months to July, following a record 20.4% plunge in the three months to June and compared to market forecasts of a 7.5% fall.
