Pound to Euro exchange rates are hovering above the 1.171 mark, down over half a cent from the peak 1.178 witnessed at the latter part of yesterday evening. Rates dipped below 1.17 this morning on the news that David Davis and Guy Verhofstadt were meeting to discuss Brexit positions.
Furthermore it was also reported this morning that households have lost £1.2 trillion in wealth since the Brexit vote, a message that is likely in some degree, to be echoed in Philip Hammond’s Autumn statement tomorrow.
Much of the buzz on Sterling exchange rates centred around Theresa May seeking a transitional Brexit, which looks to limit the impact of leaving the EU for an extended period of time. But this, as reported by the Guardian, is incredibly difficult to achieve unless the UK accepts the four fundamental EU principals.
Furthermore, EU officials have made it incredibly clear throughout the Referendum and after, that the UK cannot cherry pick from the EU menu. And whilst the UK plan to keep access to the single market, they cannot do so without accepting free movement of people.
David Davis meets Guy Verhofstadt
It comes as no surprise then, that the discussions this morning made no further advancements. What Davis called a ‘good start’, Verhofstadt wasn’t as upbeat.
Verhofstadt stated that “Today, in my talk with David Davis, unfortunately I haven’t really heard anything new. I haven’t really heard how the British government want to tackle Brexit or what Brexit really means.”
It would seem then, that the UK is no closer to understanding what it wants from Brexit.
Hammond’s Autumn statement could cause volatility for the Pound
Pound to Euro exchange rates could be tested tomorrow with the new Chancellor expected to release his Autumn statement, outlining the impact of Brexit on the UK economy. It was reported in the Financial times last week that the UK faces a £100bn financial hole as a direct result of June’s vote, which could spook markets tomorrow morning.
That being said, Mr Hammond plans to stimulate the economy by improving roads and railways which could lead to job growth, keeping the economy afloat during periods of uncertainty which could last for 5 years possibly longer. It may be prudent to stay afloat of exchange rates during tomorrow’s trading session, as large swings could present themselves during and after the Autumn statement.
Pound to Euro exchange rates could slip below 1.17 today and find themselves at the lower end of 1.16 again if Hammond appears hawkish towards the UK economy, where as rates of 1.175 possibly higher could emerge if he can demonstrate ideas that will keep the UK economy afloat.