Today also saw the UK’s manufacturing sector stumble, with the monthly figure for August falling below forecasts by -0.7 percent. In UK political news, Prime Minister Boris Johnson today met Leo Varadkar, the Irish Prime Minister, to discuss alternatives to a hard Irish border. However, with the EU set to give a formal response to Mr Johnson’s ‘final’ Brexit deal on Friday, and with analysts predicting a rejection, GBP investors remain jittery in their expectations of a no-deal outcome.
Meanwhile, the euro edged higher against the weaker pound today despite August’s German exports slumping by -1.8 percent.
The slide in exports further amplifies recession fears for the Eurozone’s powerhouse economy and increases concerns for the future health of the wider EU economy.
Analysts at Reuters commented: “Germany’s export-reliant manufacturers are suffering from a slowing world economy and business uncertainty linked to a trade dispute between the United States and China as well as Britain’s planned, but delayed exit from the European Union.”
Today also saw European Central Bank (ECB) policymakers show a united front in calls for more stimulus measures in this afternoon’s monetary policy meeting accounts.
As an emerging US-EU trade dispute and global growth slowdown undermine the Eurozone economy, bank officials perceive a heightened need for fiscal intervention.
With no UK economic data due until next week, Brexit will continue to drive the GBP/EUR exchange rate.
If the EU gives a formal rejection of the Prime Minister’s recent proposal, raised no-deal fears could potentially extend the pound’s losses.