Whether or not Boris Johnson will force through a no-deal Brexit is sure to be the current focus for investors.Recent reports suggest the UK government is ramping up preparations for a no-deal Brexit even as rebel Conservative MPs are plotting to oust the PM by joining the opposition in a vote of no-confidence. The question on everyone’s lips, however, is whether Parliament will actually be able to put the brakes on a no-deal Brexit.
Even in the event of a successful no-confidence vote, the chance that Mr Johnson could delay a general election until after the Brexit deadline could leave the UK to crash out of the EU.
Given the uncertainty that surrounds the process, it is perhaps unsurprising to see investors reluctant to bet on GBP.
Meanwhile, the euro has also been left rangebound this morning following the publication of the European Central Bank’s (ECB) latest economic bulletin.
While the bulletin failed to present many surprises, the ECB’s stance that a “significant degree of monetary stimulus continues to be necessary” in order to boost inflation and ensure financial conditions within the Eurozone remain favourable was reiterated.
Looking ahead to the end of the week, the GBP/EUR exchange rate looks poised to refresh a two-year low struck on Monday as the UK publishes its latest GDP figures.
That UK economic growth stagnated in the second quarter after a healthy 0.5 percent expansion at the start of the year seems to be the general consensus.
However, some economists suspect a contraction in growth which could place even more pressure on GBP exchange rates.
The GDP report will be also be accompanied by the UK’s latest business investment figures, with Sterling sentiment likely to be knocked by an expected slump in investment in Q2.
In the meantime, we may see the euro struggle to find momentum tomorrow morning as Germany’s trade balance is expected to report a drop in exports in June.
This could stoke fears over the possibility of a German recession.