- GBP trades 0.08% lower against EUR on Monday
- GBP/USD dropped from 1.1313 to 1.1291 last week
- The main issue appears to be President Trump’s Brexit remarks
According to Lloyds Bank’s exchange rate analysts, the GBP, Brexit and UK political uncertainties are still tussling amid signals of a recovery in economic activity.
Yesterday, the GBP/EUR rate was 0.08% lower at 1.1375, despite the GBP gaining against the US dollar.
Last Monday, the GBP/EUR rate opened at 1.1313. By Friday, it had weakened to 1.1291.
The main UK economic events last week were data releases on July 10 that strengthened the GBP, followed by a troubling end to the week as US president Donald Trump visited Britain.
The Office for National Statistics announced last Tuesday that GDP growth had improved to 0.3% in May. This was viewed as a clear sign that the British economy was recovering after starting the year in a rather lackluster way.
While the GBP gained strongly against the EUR after the news, some economists were not convinced. Deloitte Chief Economist Ian Stewart warned: “The long-awaited bounce-back from a weak first quarter has failed to materialize, with the rolling three-month growth rate unchanged into May.”
The GBP was further boosted after the National Institute for Economic and Social Research (NIESR) growth estimate came in at 0.4% instead of the previously forecasted 0.2%.
Trump’s arrival late last week, however, eclipsed the positive news. He immediately threatened that a US-UK trade deal might be in danger if the UK opted for a “soft Brexit”.
On Friday, Trump and British Prime Minister Theresa May hinted that a trade deal might still be on the cards regardless of the Brexit arrangement. This apparent U-turn failed to help the GBP recover.