The EU's demand for an extra €40bn from the UK has rattled some feathers, with Brexit secretary David Davis refusing outright to commit to anywhere close to the figure. The below table provides exchange rate movements for a number of currency pairs:
|Currency Pair||% Change||Difference on £200,000|
The Pound fell sharply against the Euro first thing yesterday morning by almost half a cent following from Brexit Secretary David Davis’ interview with ITV’s Good Morning Britain stating that the UK would refuse to pay a €100 billion Brexit Bill. The reason Sterling fell so dramatically against all of its major counterparts was following from reports from the press that the Bill had increased from €60 billion to €100 billion after looking into new data from Europe.
Mr Davis confirmed that the UK would pay the amount they are legally obligated to pay, however would not be open to paying whatever price the EU want them to.
However on a slightly more positive note, the Pound managed to regain some of the lost ground after UK Construction data for April came in at the best levels in four months, much better than expected at 53.1 compared to 52.2 in March. Any reading above 50 signals growth in the sector and demonstrates that Brexit still doesn’t seem to be having an impact on the building sector, either through weaker demand for construction or fewer workers coming from Europe. Markit, the think tank behind this data release, also claimed that UK builders have high prospects for the year ahead.
This morning UK Consumer Credit and Mortgage approvals data will be released at 9.30am, which will provide an insight into the health of the UK housing market and the amount of money British consumers borrowed in March. Any further signs of positivity could provide our clients looking to sell Sterling with another opportunity to take advantage of.
The main event to next watch out for is the second round of French Elections taking place this Sunday with the results being announced that evening, and this is highly likely to cause volatility for GBP/EUR rates. At the moment Emmanuel Macron is leading by 20 percentage points, however a surprise win for Marine Le Pen could cause drastic swings on the pairing.
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