The pound has started the week on a mixed footing, up against the euro and down against the dollar. Its volatility still stems from fears of a no-deal Brexit and uncertainty in Parliament. Jeremy Hunt, generally seen as a candidate for a softer approach to Brexit than Boris Johnson, said last week that Brexit would be ‘worth’ the economic risks – a statement that did little to quell worries over what the coming months hold.
Despite continuing to contend with no-deal Brexit worries, the pound rose against the euro and the dollar from five-month lows on Friday. This is thought to be due to a weaker euro and dollar, although continuing Brexit pressure capped sterling’s gains.
Jeremy Hunt will outline his plans for a no-deal Brexit today, which he says he will only undertake ‘with a heavy heart’. His solutions include a national task force and lowering corporate tax and business rates to help companies continue to trade, arguing that if Britain could keep them afloat in the financial crisis, it can too in no-deal. Meanwhile, Boris Johnson says he will negotiate a tariff-free area with Europe, although how possible this will be remains to be seen.
GDP data released on Friday showed that the UK economy grew 0.5% in the first quarter, coming in as expected. However, this positive news had little impact on sterling, which still continues to be governed by political developments.
This morning, manufacturing PMI data will be released, which is expected to show contraction. Any negative figures could see the pound drop.
