Euro Pound (EUR/GBP) Exchange Rate Edges Up as PM Will Not Delay Brexit
The Euro Pound Sterling (EUR/GBP) exchange rate edged up and the pairing is currently trading at around £0.8887.
Sterling slumped as reports suggested UK Prime Minister Boris Johnson would tell European Commission President Jean-Claude Juncker that the UK will not delay Brexit.
In their first meeting since July, Foreign Secretary Dominic Raab has said Johnson would emphasize he wants a Brexit deal.
An anonymous source from Downing Street has said the Prime Minister ‘would make clear that he would not countenance any more delays’.
The source added:
‘Any further extension would be a huge mistake. It is not just a question of the extra dither and delay – it is also the additional long months of rancour and division, and all at huge expense.
‘This is why the PM will stress to Mr Juncker that, while he wants to secure a deal, if no deal can be agreed by October 18 his policy is to leave without a deal on October 31 – and reject any delay offered by the EU.’
Euro (EUR) Rises despite Global Economy ‘Flirting’ With Idea of Recession
The single currency edged up against the Pound following an attack that both heightened tensions in the Middle East and disrupted global oil supply.
Yemen’s Iran-aligned Houthi group claimed responsibility for Saturday’s drone attacks that knocked out more than 5% of the world supply.
Commodities strategist at Wisdom Tree, Aneeka Gupta noted that higher oil prices would not have an immediate impact on consumers, and ‘could take a bit of time of feed through’.
Meanwhile, reports have suggested the increase in oil prices could hurt global economic growth, possibly triggering a downturn.
Commenting on this, OANDA senior market analyst, Craig Erlam said:
‘The attack was a severe as it was unexpected but that’s not the worst thing about it. Saudi Arabia believes a significant proportion of the outages can be back online in a few days while Trump also approved release of supplies from the Strategic Petroleum Reserve to ensure the market remains well surprised.
‘None of this should make us feel relaxed about the potential for further attacks through and the longer-term implications on the oil market. Spikes in oil prices when the global economy is already flirting with the idea of recession is not ideal and, if repeated and sustained, could ultimately be what tips us over the edge.’
However, this had little effect on the safe-haven Euro on Monday morning, as it remained steady against a handful of currencies.
Euro Pound Outlook: Will Disappointing German Sentiment Leave EUR Under Pressure?
Looking ahead to Tuesday, it is likely the Euro (EUR) will slump against the Pound (GBP) following the release of the ZEW German Economic Sentiment Index.
The single currency is likely to slide if September’s index reveals Germans are growing increasingly pessimistic about the future, and the index falls further into contraction.
Meanwhile, it is likely Brexit will continue to remain the main catalyst for movement of Sterling ahead of Wednesday’s Brexit debate in European Parliament.
If the Prime Minister continues to insist he will not delay Brexit, Sterling sentiment could be left dampened and the Euro Pound (EUR/GBP) could remain flat.