French President Francois Hollande made it clear during talks with Theresa May that if the UK wants to have access to the single market, then they must be part of the freedom of movement agreement. Hollande suggested that if the UK doesn’t accept freedom of movement then they would need a different status.
Despite this firm stance from Hollande, the GBP/EUR rate moved above the 1.20 level first thing this morning. Whilst Hollande is under a lot of pressure domestically to make sure Britain are given a tough time, there is significant Anti-EU sentiment bubbling away in France.
May on Wednesday had what appeared much friendlier talks with German leader Angela Merkel. Considering that the UK imported over twice as much from Germany as France, it’s clear which discussions could be more important.
The GBP/EUR rate dropped a cent mid-morning today as the UK’s Purchasing Managers Index was reported lower than expected. The market is responding aggressively to any movements currently and this slightly negative data was no exception.
Mario Draghi Believes Brexit Fears are Easing
Yesterday Mario Draghi President of the European Central Bank during his post interest rate decision statement suggested Brexit has not taken effect yet. Draghi emphasised that at the minute the consequences have blown over, but he is of the opinion that there will eventually be some fallout.
Whether it comes in the form of businesses putting future projects on hold and not borrowing funds or consumers spending less it’s yet to be seen. But one thing that was certain is there was very little opportunity in savings before the vote, due to low interest rates so spending may be the only way to improve your pension.
Draghi was also quick to point out that he is prepared to take further measures to make sure the EU gets back on the right track. Considering there is already €80bn a month in quantitative easing being pumped into the Eurozone, any further funds would arguably only just generate more debt.