Commenting on this, British Chamber of Commerce head of economics, Suren Thiru said: “Our findings point to a worrying drop-off in UK economic activity, with unrelenting uncertainty over Brexit and a notable slowing in global growth prospects dragging down almost all the key indicators in the quarter.” Sterling sentiment was further dampened by reports revealing the European Union is “open but not convinced” by Boris Johnson’s new Brexit proposals, with European Council President Donald Tusk one of the many leading EU voices to express doubt over the Prime Minister’s plans.
The issue with the Irish border is a persistent sticking point, with Irish Prime Minister, Leo Varadkar welcoming the plans but adding that they fell “short in a number of aspects”.
Meanwhile, reports indicate that Mr. Johnson will send a letter to the EU requesting an extension to Article 50 if a mutually acceptable deal fails to emerge by 19 October.
But no-deal fears continue to cast a cloud over market sentiment, sending Sterling lower as investors question whether EU member states will provide a consensus agreement to the extension request.
Meanwhile, data this morning revealed a slight uptick in September construction growth for the Eurozone.
Markit showed that the bloc’s construction PMI edged out of contraction to 50.5 thanks to stable trends in both Germany and Italy.
While job growth was modest, last month’s data extended the current run of construction workforce expansion started in February 2017 and provided a slight upswing in support for the euro.
However, the survey also showed that new orders had contracted anew.
Markit economist, Eliot Kerr commented: “Broad stability in Germany and Italy, as well as an increase in France, helped support a slight recovery in Eurozone construction activity during September. However, underlying data revealed persistent downward trends, as new orders continued to fall and the rate of job creation eased for the third month in a row.”
Looking ahead to next week, the euro could see some support if German factory orders for August rebound following a record five-month slump.