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Sterling slips further following customs union confusion

By May 18, 2018September 27th, 2022No Comments

GBP has fallen further against the Dollar and the Euro following fresh concerns over Britain’s decision on whether it is to remain in the EU customs union after the Brexit transitional arrangement or withdraw completely from it.

Yesterday, Theresa May announced that Britain would leave the EU customs union after Brexit, however, there is talk that London is thinking about a backup plan which would implement the bloc’s external tariffs after December 2020.

Adam Cole, RBC’s chief currencies strategist said: “Markets are still uncertain about where we are going to be on the other side of the transition deal.” He also went on to suggest that the market wanted to see proof that Britain would remain within the customs union indefinitely, instead of momentarily.

GBP slipped 0.1% to $1.3496, and against the Euro fell 0.2% to 87.475 pence per Euro.

The reasons behind the Pound tumbling this week include: the major shift in market expectations for the interest rate, economic weakness, and of course the concerns circling around the relationship between Britain and the EU after Brexit.

The fate of the Pound hangs in balance until the government clears up the customs union issue once and for all.

Political uncertainty also reigned across the Eurozone, as fears over Italy began to concern investors, the Euro crawled towards its 5th consecutive weekly descent against the Dollar, slumping 6 cents in the three weeks following the massive Dollar rally and among worries regarding Italy’s upcoming government.

On Wednesday, the Euro had fallen to a five-month low of $1.1763 against the Dollar. After falling almost 1.2% this week, the Euro rose 0.2% to $1.1814, as fears over Italy cooled somewhat.