GBP/EUR Weekly Outlook 3rd-7th of June + Brexit Update
Yesterday’s press conference at the EU emergency summit brought a six-month extension to the UK’s exit date (to 31st Oct), with a review on progress in June. Commission President Junker played down the importance of this review, stating that it was “not another cliff edge”. Sterling’s reaction was muted as markets look for more substantial updates that progress is been made with Brexit.
The week ahead is (once again) a key one for Brexit but its hear at last. Meanwhile, the Chancellor of the Exchequer will give his Spring Statement. It is unlikely to herald any immediate policy actions, but will set the context for some important upcoming decisions.
Over the weekend at least one well-known Brexiteer seemed to suggest that he would be prepared to vote for the deal if it is amended to rule out a permanent tie-in to the EU. The PM seems set to return to Brussels to extract such a concession, although the EU is so far still indicating unwillingness to time limit the backstop. Meanwhile, markets have reacted to recent developments by pushing sterling higher. The pound enjoyed its best week since 2017 rising to 1.32 against the US dollar and to 1.16 against the euro.