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Pound falls as report says EU officials considering placing economic sanctions on Britain post-Brexit

by | 1 Feb, 2018

Nordstrom Kohl's Target Macys

Theresa May leads a cabinet meeting at Chequers – the Prime Minister’s country retreat in 2016

The Pound fell against the single currency today off the back of a report that said EU officials in Brussels were considering placing economic sanctions on Britain after Brexit, alongside the release of new data which showed the U.K. construction sector was struggling.

The Financial Times report said measures published on Thursday showed the EU wanted safeguards after the U.K. leaves to preserve a “level playing field” and to counter the risks of Britain lowering its tax rates or relaxing regulation for businesses in order to make it a more competitive economy.

The report also stated officials in the British government were considering striking a deal with the EU which would keep part of the economy in the single market (customs union) to limit trade losses.

Trade secretary Liam Fox said this aspect of the report was untrue, and that they were not considering a deal to keep the U.K. in the customs union post-Brexit. Fox said: “It is very difficult to see how being in a customs union is compatible with having an independent trade policy.” He added, “We have to be outside of that to take advantage of those growing markets.”

In other bad news, fresh data showed the U.K. construction sector ground to a halt in January. IHS Markit’s purchasing managers’ index for the construction industry fell to 50.2 for last month falling from 52.2 for December 2017. Anything below 50 indicates a contraction in the sector.

Meanwhile, British Prime Minister Theresa may said today that a transition deal between the U.K. and EU would be reached within 7 weeks, in a statement that was designed to ease fears that negotiations were reaching another deadlock over trade.

The words came as she was set to conclude a 3-day visit to China, where she met Chinese leader Xi Jinping and agreed a joint trade and investment review with the country that would lead to £9 billion in business deals for the U.K. after Brexit.

Related: Hooray for the U.K. – Pound rises amid strong employment and wages data

Nordstrom Kohl's Target Macys

GBP moves lower February 2nd

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

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