EUR/GBP Likely to Drift Lower on Brexit
Recent upward move in EUR/GBP is likely to face a few barriers
by Abi Moses on 25th October, 2017
The recent upward move in EUR/GBP is likely to face a few barriers in the short term. This news comes as Spain looks to exert its authority over Catalan. Meanwhile, the latest Brexit dinner in Brussels may have produced a more positive outcome, for both sides.
According to reports, the Spanish government is predicted to activate Article 155 of the constitution this weekend, ultimately suspending Catalan’s autonomy and once again taking control over the region. Overall, this development is likely to push Catalan’s President to declare Independence. This ultimately sets the scene for more street protests and general unrest. Plus, Spain will have to handle the internal problem on their own following what EU Council President Donald Tusk said. He stated that “There is no room, no space for any kind of mediation or international initiative or action.”
Any good news from Thursday’s EU Summit dinner is likely to boost GBP after a week in which EUR/GBP has come close to a five-week high. The UK PM, Theresa May is set to attend this dinner next week. Recent talks according to the meeting is that the EU is predicted to say that ‘sufficient progress’ has not been made yet. This will allow trade talks to continue, now that the EU are starting internal preparation for a comprehensive trade agreement with the UK.
Earlier today, GBP slipped after the Bank of England Deputy Governor, Jon Cunliffe, said that it was not clear if UK interest rates needed to rise. Speaking to BBC Radio Wales, Cunliffe said that rates will need to rise slowly and gradually, but “when that process should actually start, I think is a more open question.”
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