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Pound rises as EU officials tone down “punishment clause” then falls off weak retail data

by | 16 Feb, 2018

The Pound is in a bit of a bull market

The Pound saw a nice move up against the Dollar early Friday after reports showed diplomats from the European Union had watered down a “punishment clause” from a draft text of the arrangement for the Brexit transition period which was published last week.

The draft text demanded Theresa May accepted powers allowing the EU to ground flights, suspend single market access and even impose trade tariffs on the UK if it broke EU rules during the transition phase. The aggressive protectionist tone from the European Union in the text has ruffled feathers in Westminster, with David Davis saying the EU was using “discourteous language” in the text, which was not helpful to negotiations.

The news broke on the same day the Chief EU negotiator Michel Barnier addressed an audience at the Munich Security Conference, where he made clear that maintating the unity of the EU’s 27 members states was in his opinion far more important than providing Britain with an advantageous post-Brexit deal.

Clearly the relationship between the 2 negotiating teams is still strained, with significant disagreements over the Irish border and future trade terms.

The British currency was heading for its best weekly performance since September, but by mid-morning the Pound had reversed its gains, after fresh U.K. retail sales data was once again disappointing, a surprise to no one given the bleak forecasts for the economy over the near future. Amid higher inflation and economic uncertainty overall sales rose only 0.1 per cent month on month against hopes for 0.5 per cent. It seems shoppers are feeling the squeeze on their wallets.

For the Dollar, a downswing continues. The greenback is continuing to weaken despite a strengthening economy, which is helping to push up gold prices – read more on why here. The USD has fallen on 21 days of the year so far. 

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

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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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