Macron’s comments met with staunch criticism from Pro-leave MPs who identified the Irish backstop as one among many issues in need of a resolution. This threw doubt on hopes that any alternative proposal to the backstop will gain Parliamentary approval. Sir Bill Cash, the Chairman of the House of Common’s European Scrutiny committee, was sceptical: “You can’t restore self-government as a cut and paste operation and I am sure they understand that – taking parts of the withdrawal agreement. We will be governed for a number of years by the other 27 member states under the existing draft withdrawal agreement… even with the backstop removed.”
In economic news, pound traders are showing signs of anxious anticipation ahead of Bank of England (BoE) Governor Mark Carney’s evening speech at the Jackson Hole Symposium. Any dovish comments about the state of the UK economy could drag on Sterling.
Meanwhile, the euro failed to gain on the pound today as economic woes and the looming potential for a near-term German recession haunt the single currency.
This follows yesterday’s German manufacturing PMI for August which remained mired in contraction territory, confirming expectations for weak growth in the third quarter.
Lee Hardman, a Currency Analyst at MUFG, said yesterday’s PMIs would exert further pressure on the European Central Bank (ECB) to “deliver further stimulus to support growth.”
Euro investors will be looking to the US and the Jackson Hole Symposium today. Any indication of a slowdown in the US economy could potentially result in a boost for the single currency because of its negative correlation with the US dollar.
The pound euro exchange rate is likely to remain volatile into next week as hopes for a successful UK-EU compromise continue to wane.