Euro Pound (EUR/GBP) Exchange Rate Muted as No-Deal Could Cripple UK Car Industry
The Euro Pound Sterling (EUR/GBP) exchange rate remained muted and the pairing is currently trading at an inter-bank rate of £0.8951.
The UK’s car industry warned a ‘seismic’ no-deal Brexit in October could add billions of Pounds in tariffs.
The tariffs and border disruption could cripple the sector.
Warning of the disruption, the Society of Motor Manufacturers and Traders (SMMT) stated:
‘Leaving the EU without a deal would trigger the most seismic shift in trading conditions ever experienced by automotive, with billions of Pounds of tariffs threatening to impact consumer choice and affordability.’
Meanwhile, Boris Johnson revealed to the BBC that he would need co-operation from the European Union.
Johnson added that he did ‘not believe for a moment’ that the UK would leave the EU without a deal.
However, he stated that if the EU did not co-operate he was willing to leave the bloc without a deal.
Euro (EUR) Flat as EC Likely to Give Italy Time to Bring Down Debt
Meanwhile, minutes from a European Commission meeting on 5 June revealed the EC could give Italy until the end of the year to bring down its debt.
The Italian government is likely to have between three and six months to show its commitment.
However, this could do little to buoy the single currency on Tuesday afternoon.
Italian Deputy Prime Minister, Luigi Di Maio stated that the EU would allow Italy to increase its deficit if it aided the country’s economy.
He also added he was confident the government had a clear idea on how to reduce its budget deficit.
Sterling (GBP) Muted as CBI Retail Sales Suffer Fastest Annual Slump in Decade
On Tuesday morning, data released by the Confederation of British Industry (CBI) revealed retail sales slumped.
The CBI monthly retail sales balance fell from -27 to a lower-than-forecast -42 in June.
This was the fastest annual slump in 10 years which likely dampened sentiment in Sterling.
Commenting on the data, CBI Economist, Alpesh Paleja stated:
‘This month’s drop in sales should be taken with a pinch of salt, given the backdrop of last June’s heatwave and the start of the World Cup.
‘But even accounting for both factors, underlying conditions on the High Street remain challenging.’
Euro Pound Outlook: Will Disappointing German Consumer Confidence Weigh on EUR?
Looking ahead to Wednesday, the Euro (EUR) could fall against the Pound (GBP) following the release of the German Gfk consumer confidence data.
If it is revealed that consumer confidence has fallen lower than forecast, it could dampen sentiment in the single currency.
Meanwhile, Sterling could fall following the release of the Bank of England’s (BoE) inflation report hearings.
If the BoE believes UK inflation will soon fall below its 2% target, the Euro Pound (EUR/GBP) exchange rate could rise.
