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Pound Euro exchange rate flat as Irish backstop left unresolved


The Commission stated the purpose of today’s meeting was to “take stock” and look to the “next steps”, adding: “President Juncker recalled that it is the UK’s responsibility to come forward with legally operational solutions that are compatible with the withdrawal agreement. “President Juncker underlined the Commission’s continued willingness and openness to examine whether such proposals meet the objectives of the backstop. Such proposals have not yet been made.”

During Monday’s meeting between Prime Minister Boris Johnson and EC President Jean-Claude Juncker, both side agreed discussions “needed to intensify” and meetings “would soon take place on a daily basis”.

However, Downing Street has asserted the Prime Minister “would not request an extension and take the UK out of the EU on 31 October”.

The pound remained under pressure as the UK and EU stances remain disparate with investors once again fearing a no-deal outcome. 

Meanwhile, the European Central Bank’s (ECB) chief economist, Philip Lane said the bank remains unwavering in its commitment to lift inflation and would be able to provide further stimulus if needed. 

Speaking in London, Mr Lane said: “The ECB’s mandate for price stability is unconditional, and the Governing Council is unwavering in its commitment to achieve its inflation aim.”

He also challenged criticism that the ECB could be kept in the market indefinitely thanks to the open-ended bond purchase scheme, and noted that stimulus measures would soon buoy inflation and allow the bank to exit the market. 

However, the single currency was left under pressure as more than one third of the rate-setting Governing Council opposed reintroducing parts of the stimulus package.

Mr Lane also noted that the bank was driven to act by downgraded forecasts, and when faced with such low growth “you have to respond”.

Looking ahead to Tuesday, the single currency could slump against the pound following the release of Germany’s ZEW Economic Sentiment Index.

Euro sentiment is likely to be left dampened if September’s index slides further than expected, revealing further weakness in the bloc’s largest economy. 



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