The euro remained steady throughout the week. The combined effect of the Macron majority in France bolstering confidence and the lack of economic data meant that it saw little movement. Headlines were dominated by the initiation of the Brexit talks. While it’s too early to draw any strong conclusions, Barnier’s reiteration of the EU’s initial stance of negotiating the UK’s exit prior to negotiating any new trade bills demonstrated who holds the majority of the cards in the discussion at this point. Theresa May’s reassurance of allowing EU nationals to stay in Britain in return for a reciprocal agreement for British nationals in the Eurozone are the first signs that the initially promised ‘hard Brexit’ is unlikely to materialise and that the UK may be willing to negotiate.
Sterling has seen its tightest range against the euro since 2014; its performance against the euro was influenced heavily by domestic activity. The pound dipped after Bank of England boss Mark Carney suggested the time was not right for a UK interest rate rise, but soon recovered after he was contradicted by his chief economist colleague Andy Haldane who implied he thought last year’s rate cut should be reversed “relatively soon” . There was little movement on the eventual arrival of the Queen’s Speech but now all eyes are on whether the proposals, a third of which focus on measures to enact Brexit, are passed through parliament.
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