The pairing steadied following the current favourite Conservative leader candidate, Boris Johnson, threatening to withhold Britain’s £39bn ‘divorce’ bill from the EU until more favourable terms are agreed over Brexit. Mr Johnson said: “I think our friends and partners need to understand that the money is going to be retained until such time as we have greater clarity about the way forward.” Today saw the release of the UK GDP figures for April, which fell by -0.4 per cent, leaving many Sterling traders concerned over the UK’s economic health. UK manufacturing production figures also fell below the consensus increase of 1.3 per cent to -0.8 per cent, while industrial production for April also weakened, coming in at -2.7 per cent.
Meanwhile in political news, the UK has signed a post-Brexit free trade deal, in principle, with South Korea.
South Korea’s Trade Minister, Yoo Myung-hee, commented: “The deal is significant as it eased uncertainties sparked by Brexit, amid the already challenging environment for exports on the escalating trade row between Washington and Beijing.”
Meanwhile, the euro failed to benefit from the improvement in Italy’s industrial output figures for April, which came in at a better-than-expected -0.7 per cent, although it was still a contraction.
French and German markets are closed today for Whit Monday, leaving the euro sensitive to global economic and political developments instead.
Italy, meanwhile, is remaining in focus for many euro traders as Rome now faces a budget crisis.
It could see disciplinary procedures being put in place by the European Commission.
The pound euro exchange rate will remain sensitive political developments this week.
With the leadership of the Conservative Party still remaining uncertain, this is likely to hold back some of Sterling’s gains.