Pound Sterling DROP: Economist’s warning as pound could fall FURTHER as Brexit talks stall | City & Business | Finance
The escalation of fears surrounding a no deal Brexit are said to be one of the causes of the low exchange rate.
Mr Juckes, a Global Strategist from Societe Generale told Bloomberg: “The market for each of those points when we look back on them is saying sterling is too weak.
“Things have got too weak in trade-weighted terms. The euro-sterling rate is important because it correlates extremely closely with the trade-weighted value of the pound in an inverted sense.
“This is because we do all our trade with Europe not the United States despite what any politician tells you.
“At those levels, it looks extremely likely we will make a new high in euro-sterling at some point and a new low in the trade-weighted index.
“I think that is almost inevitable through this Brexit process before we are done.”
Exchange rates between pound sterling and the US dollar are not much better as sterling slid to its lowest level against the US dollar in almost a year, at $1.2850 in the foreign exchange on Thursday morning.
The latest warning against the UK getting a bad Brexit deal has come from Scotland’s First Minister Nicola Sturgeon, who recently met Prime Minister Theresa May in Edinburgh.
She said: “With every day that passes, the prospect of a no deal Brexit or a Brexit with very, very little information about the future relationship seems to become more and more likely.
“Both of those outcomes would be completely unacceptable, absolutely disastrous for our economy, so I hope she can reassure me that neither of those things are going to happen.
“But if she can’t, then I hope she will outline her plan B, because we cannot simply take a step off that Brexit cliff-edge next March without knowing what comes next.”
Sturgeon went on to warn that the so-called ‘Chequers Deal’ was inadequate and that sticking to this plan would risk an undesirable Brexit outcome.
The euro could remain in the spotlight today when the European Central Bank (ECB) releases its economic bulletin.
This might reveal an optimistic outlook among ECB officials and could lead to more impressive euro pound exchange rate gains.
Beyond today’s Eurozone data, the pound might just be able to stage a recovery on Friday if UK GDP growth rate stats show a faster pace of economic expansion.