Robust GDP figures from the UK didn’t do all that much to sterling yesterday morning. Reports that the UK economy expanded on average by 0.6% during the three months to July 2018 would normally help strengthen the pound, but the release was overshadowed by Brexit concerns. There simply was not the risk appetite we might have seen in different circumstances.
But then the European Union’s chief Brexit negotiator Michel Barnier spoke at a conference in Bled, Slovenia, where he said that a Brexit deal within six to eight weeks is ‘realistic’. Off came the shackles of the morning and the pound jumped once more against the euro and dollar. Intriguingly, Barnier said that those claiming the EU had rejected the Chequers plan were incorrect, even as news filtered through that up to 80 Tories will vote against the plan.
We now appear to be in a position where the EU is open to the UK’s proposals, but the UK can’t agree on whether it is open to its own proposal. Theresa May is in an impossible position, where no matter what she does she cannot win. Downing Street was defiant and said the Chequers Brexit plan is ‘the only plan on the table that will deliver on the will of the British people while avoiding a hard border in Northern Ireland’.
Over the weekend, Sweden’s election showed a country deeply divided. The Social Democrats remain the largest party with 28.4% of the vote, but there have been calls for the incumbent Prime Minister, Stefan Löfven, to resign. We could be in for weeks or even months of negotiations to form the next government.
Today we have the unemployment rate from the UK, as well average earnings for July. We will also see the ZEW economic sentiment indices from Germany and the eurozone.
As always, there are numerous factors pulling the pound this way and that. Make sure you protect your money by using a forward contract to lock in the exchange rate. Simply call your Personal Trader on 020 7898 0541 to find out how.
