The British pound sterling is shaping out to be one of the worst performing currencies this week. The GBP started off by recovering some of its losses after Prime Minister Boris Johnson managed to secure a withdrawal agreement with the EU at the end of last week.
However, the deal did not go forth in Parliament and now the UK is in limbo again, waiting to see if the EU will grant it a three-month extension to the Brexit deadline. Johnson has said he wants to hold elections in December if that happens, but the opposition is reluctant to back the PM’s plans.
The GBP fell to 1.2857 against the dollar and 1.1560 versus the euro.
The European single currency is not doing so well either. Yesterday’s ECB press conference struck a grim tone like usual, with out-going ECB President Mario Draghi stating that the economy is not in good shape and needs further support. Christine Lagarde, who currently manages the IMF, will inherit Draghi’s post next month. It is unclear if Lagarde will run the ECB the same way as Draghi, especially because the bank is split in its views on further stimulus and rate cuts.
Still, the trend among central banks to ease their monetary policies continues. Just this week, both Turkey and Indonesia cut interest rates. The Federal Reserve might do the same next week, considering inflation and growth have been lower in the US lately.
