Brexit developments pulls the Pound down from Fridays high

£-€ rates spiked to a 5-week high on Friday after encouraging PMI & retail sales figures from the UK. Mid-market briefly hit 1.1170, before Brexit developments took away those gains just two hours later. 

Retail sales beat estimates by 1.6% for the month of July, which also showed that levels had returned to pre-pandemic. PMI also beat estimates for the month of August with the all-important services sector leading the charge. Elsewhere, the Euro-Zone's PMI for August came in way below expectations which proves the recovery is slowing down in EU countries.

Interestingly from the report, online sales are up 50% since pre-pandemic levels, further accelerating our path to digitalisation and for the first time in history, UK national debt has surpassed £2 trillion. 

Onto Brexit now and EU Chief Negotiator Michel Barnier was clearly less than impressed by the weeks trade talks with the UK. "I'm disappointed, concerned and surprised" were his words with UK's Chief Negotiator David Frost saying that the EU were being "unnecessarily difficult". Whilst the Pound has lost a cent or so since Friday, the market seems little concerned by the comments, maybe because we have heard this type of talk a hundred times before.

Talks recommence next month, where volatility for £-€ rates will 'kick-in' again as the clock really starts to countdown on a deal. We feel at this stage the EU are playing a dangerous game, as the UK's recovery is superior to that of the EU's currently and this looks set to continue in the coming months. A 'no-deal' Brexit would add huge pressure to an already sluggish Eurozone economy and we believe at least a 'bare-bones' deal will be agreed come November.

With virtually no economic data due out for the UK this week, £ sellers will be hoping to see poor data from the Euro-Zone & US economies for positive movements. 

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