- Posted by currencies in Bank of England, Bremain, Brexit, Budget, Currency, Economy, EUR, GBP, Inflation, No Deal, Retail Sales, Sterling, UK, Uncategorised
- August 16, 2019
- No Comments
The pound gained for a second consecutive day today after a stream of resilient economic data this week calmed sentiment on the health of the UK economy and as opposition parties launched plans to block a no-deal Brexit.
British retail sales unexpectedly expanded in July and signalled that consumers were taking the prospect of Brexit in their stride for now, helped by firm wage data and modest inflation pressures, according to data released earlier this week.
Further fuelling demand for the British currency, especially against the euro this week, was growing momentum to try to stop Prime Minister Boris Johnson from taking Britain out of the European Union at the end of October without a deal.
The opposition Labour party said it would call a vote of no-confidence in Johnson’s government as soon as it believes it can win it and seek to form a temporary government under leader Jeremy Corbyn to delay Brexit.
This was seen by some investors as confirmation that parliament is ready to do all it can to avert a no-deal Brexit. Though most analysts still see a no-deal exit more likely.
Analysts say it is unlikely that sterling will rise much further given the growing risk of Britain crashing out of the European Union without a divorce deal in October.
Johnson has promised to take Britain out of the European Union by Oct. 31, with or without a deal, setting the scene for a showdown in parliament where lawmakers are opposed to a divorce without a transition agreement.
The euro fell to a two-week low against the dollar, which extended the gains it made the day before after U.S. retail sales data came out better than expected.
China on Thursday said it would retaliate for the latest U.S. tariffs on $300 billion of Chinese goods, but U.S. President Donald Trump said any pact would have to be on America’s terms, suggesting a resolution to the trade war remains elusive.