Published On: Fri, Sep 21st, 2018

Pound euro exchange rate: GBP slumps after EU leaders condemn Chequers plan


The pound has fallen back against the euro this morning as Transport Secretary Chris Grayling threatened that the UK could leave the EU without a deal unless the EU is willing to compromise in talks, particularly regarding the Irish Border.

Speaking to the BBC Mr Grayling said: “At the moment what the European Union is asking in and around Northern Ireland is simply impossible for any UK government to accept.

“And actually if they stick with that position, there will be no deal.”

His comments come after EU leaders condemned Theresa May’s hard fought Chequers plans at a summit in Salzburg yesterday, with EU chief Donald Tusk suggesting the proposals would need to be redrawn.

While Mr Grayling stated he is still confident that the UK and EU will reach an agreement, his comments were not well received by investors, leaving the pound to slump this morning.

At the same time the euro’s gains have been tempered somewhat this morning by the publication of the Eurozone’s latest PMI figures.

Today’s flash figures published by IHS Markit revealed that private sector growth in the Eurozone continued to cool this month.

This was particularly true for the bloc’s manufacturing sector, which expanded at its slowest pace since May 2016 amid growing political uncertainty.

Chris Williamson, Chief Business Economist at IHS Markit said: “A near stagnation of exports contributed to one of the worst months for the Eurozone economy for almost two years.

“Trade wars, Brexit, waning global demand, growing risk aversion, destocking and rising political uncertainty both within the Eurozone and further afield all fuelled the slowdown in business activity.”

Looking ahead to next week’s session, Brexit is likely to remain the main catalyst for movement in the pound euro exchange rate, especially amid a lull in notable UK data.

Meanwhile euro investors are likely to be focused on the Eurozone’s latest CPI figures next week, with another robust inflation reading potentially bolstering the euro at the tail end of the session.



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