Pound euro exchange rate: GBP muted as Hammond warns of no-deal Brexit
Speaking to the BBC, Mr Hammond said: “In no-deal circumstances we would have to refocus government priorities so that government was concentrated on the circumstances that we found ourselves.”
The comments come shortly after Treasury Minister John Glen was photographed with a document detailing the government’s contingency plans for a no-deal Brexit, including a £1.5bn fund to help departments prepare.
With the UK’s future relationship with the EU still unclear it could lead Mr Hammond to delay making any sweeping changes to taxes later this year when he unveils his Autumn Budget.
Meanwhile the euro is finding support this morning following the release of the latest Eurozone GDP estimate.
According to data published by European statistic agency Eurostat, the Eurozone economy expanded by 0.4 per cent in the second quarter, in line with market forecasts.
However, slightly denting the single currency was the annualised figure, which revealed year-on-year growth slowed from 2.2 per cent to 2.1 per cent.
This slide was attributed to a slowdown in export growth since the start of 2018 as a result of concerns over US trade policy.
Looking ahead to next week’s session, movement in the GBP/EUR exchange rate is likely to be driven by the Bank of England’s (BoE) latest policy meeting.
While the meeting is not expected to result in any changes to monetary policy, an upbeat economic outlook from the bank could support a potential rise in the pound.
However Sterling could still face some headwinds ahead of the BoE meeting as economists forecast that the UK’s latest labour report will show that June’s drop in unemployment was only temporary, with the jobless rate expected to have climbed back up to 4.2 per cent in July.
Meanwhile the European Central Bank (ECB) is also scheduled to hold its September policy meeting next week.
We could see the euro tick higher in the latter half of the week if the ECB confirms it will finish winding down its quantitative easing programme by the end of 2018.
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