Thursday 19 July 2018

Brexit keeps pound under real pressure

'Analysts - and businesses here exporting into the UK market - will be watching for any further movements.' Photo: PA
'Analysts - and businesses here exporting into the UK market - will be watching for any further movements.' Photo: PA

Bloomberg

The pound may continue to be hobbled by Brexit this week, as concerns over reaching a transition deal outweigh the hawkish stance of the Bank of England.

Sterling had its worst five days since October last week, after a brief boost from the central bank, as the European Union's chief negotiator Michel Barnier said a Brexit transition deal was not a given.

The prospect of a two-year transition period had driven sterling above $1.40 (€1.14) in January, and comments by the UK government are likely to command investor attention as just one month remains until a deadline to agree it before an EU summit.

UK Foreign Secretary Boris Johnson is reported to be planning a Brexit speech on Wednesday and Prime Minister Theresa May is to deliver one in Munich on Saturday.

Mrs May is said to be telling her team to aim high, yet Mr Barnier suggested a deal may not be agreed until later in the year.

Analysts - and businesses here exporting into the UK market - will be watching for any further movements.

Pound upside is limited "at least for now", said Thu Lan Nguyen, a currency strategist at Commerzbank.

Bloomberg

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