Time for a recap:
Brexit fears have dragged the pound down to its lowest level in almost a year.
Sterling slid by three quarters of a cent today to hit $1.2920, its lowest point since September 2017, as City traders fretted about the slow pace of Brexit talks.
The selloff was blamed on international trade secretary Sir Liam Fox, and his warning that a ‘no-deal Brexit’ was a 60:40 chance. Fox also attacked the European Commission for being intransigent, declaring.
If the theological obsession of the unelected takes priority over the economic wellbeing of the people then it’s a bureaucrats’ Brexit.
This latest sign that UK-Brussels negotiations are floundering also sent the pound down against the euro, losing half a eurocent to €1.119.
Theresa May’s spokesman, though, insists that Britain is confident of getting a good deal (which sticking to its fallback position that no deal is better than a bad one).
The EC have denied hampering Brexit talks, telling reporters that:
“We are working constructively, day and night, to reach a deal with the United Kingdom and I think this is also reflected in the fact that the next negotiation round is scheduled for 16 and 17 of August.”
City analysts are bracing for more volatility in the months ahead, as Britain heads towards Exit Day, 29th March 2019.
Analysts at Capital Economics predict that the pound could fall to $1.20, if London can’t agree a deal with Brussels (or rise to $1.40 if the no-deal threat is avoided).
Financial markets have also been jolted by a worrying drop in German factory orders. New manufacturing orders shrank by 4% in June, the biggest drop in almost 18 months.
Orders from within Germany, across the eurozone, and beyond all fell — a bad sign for economic prospects.
The decline may show that Donald Trump’s imposition of tariffs on China and the EU are damaging the global economy, denting confidence and cutting demand for German goods.
Economists warned that the “horrendous” data suggests Europe’s powerhouse economy is weakening. And with trade war fears escalating, the situation could worsen this autumn.
This has pulled several European stock markets into the red today, with Germany’s DAX index down 0.3%. Britain’s FTSE 100 ended the day flat, though, as the falling pound helped exporters and firms with overseas earnings.
That’s probably all for today. Thanks for reading and commenting. GW