Yet again, another day of doom and gloom within the Brexit bubble. After a recent upturn in sterling, we find ourselves lower again today on the back of an unsuccessful summit in Salzburg. The EU have strongly rejected May’s proposal, and don’t appear to be softening their stance. Donald Tusk took a bullish stance, and has insisted that there needs to be a new proposal in time for the next summit in October, which may then lead to a November agreement. How both sides can get around the Irish backstop issue remains to be seen, and May has already said that there is no prospect of Brexit being reversed in a second referendum.
Yesterday we saw the run of positive UK data continue, with month on month retail sales coming out at 0.3%, compared to the forecast -0.2%. This led to a run in GBP taking it over the 1.13 barrier against the euro, and taking it up to 1.3295 against the dollar. Whilst all of the negativity regarding Brexit ensues, unfortunately these snippets of positive data don’t have the desired sustained impact of previous moves.
Elsewhere, the bullish run of the dollar seems to be slowing down, with Trump yet again slamming OPEC over prices and continuing his assault on China and trade tariffs. It seems as though the trade will rumble on for some time, with Trump threatening further tariffs on all other consumer products. This led to the dollar closing the day roughly 0.8% down against the euro, with EURUSD reaching highs of 1.1776.