Mr Gove also added that a “[n]o-deal is now a very real prospect” following comments from Brussels last week which rejected the possibility of re-opening debates on the withdrawal agreement. The Institute for Government (IfG) also warned that there is “no such thing as a managed no-deal”. The IfG said in its report: “No deal is a step into the unknown: the Prime Minister’s second 100 days will be even more unpredictable than his first. “Rather than ‘turbo-charging’ the economy, as Johnson has suggested, the government is more likely to be occupied with providing money and support to businesses and industries that have not prepared [for a] a no-deal Brexit.”
With Sterling traders looking ahead to Thursday’s statement from the Bank of England (BoE), concerns over the UK’s economy and a potential no-deal are proving pound-negative as expectations of a dovish outlook from the central bank increase.
The pound failed to benefit from today’s better-than-expected UK mortgage approvals figures for June, which rose from 65.64k to 66.44k – its highest level since January.
Brexit is in the spotlight for pound traders today as tensions rise between Brussels and the UK.
The GBP/EUR exchange rate could sink further if Boris Johnson continues to demand that the EU drops the Northern Irish backstop from its withdrawal agreement – a condition that the EU has several times rejected.
The euro, meanwhile, is likely to continue fluctuating ahead of the release of the Eurozone’s latest growth data later in the week.