EU Legal Action Causes GBP/EUR Rate to Plummet

During trading on Thursday, the Pound plummeted reaching a new six-month low against the Euro with the exchange rate dropping to 1.0836 while it also dropped to 1.2817 against the US Dollar. This followed news that the EU planned to take legal action against the UK while it was made clear that all trust between the EU and UK had been damaged, making a post-Brexit trade deal highly unlikely. News this morning that the UK had started the third quarter well will help to bolster the currency on the Foreign Exchange Market.

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There was a growth of over 1% in the Euro to Pound rate after it was announced that the European Central Bank is not going to making any changes to its monetary policy. Along with this, investors were also boosted by the news that growth forecasts had been positively revised.

It was another day of struggle for the US Dollar after market sentiment was still upbeat which saw demand drop considerably. However, things turned quickly after there was a lack of agreement on stimulus and that saw the equities markets take a hit. Despite the USD to GBP rate strengthening, as UK and EU tensions caused the Pound to weaken, the US Dollar weakened against the Euro.

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