Sterling rises against weaker dollar as UK-EU agree trade reset
(Reuters) May 19 - The pound rose against a weaker dollar and fell against the euro on Monday after Britain agreed a major trade and defence reset with the European Union, though FX market attention stayed on U.S. developments.
Britain agreed the most significant reset of ties with the European Union since Brexit on Monday, removing some trade barriers and collaborating on defence but also touching on sensitive issues including fishing rights.
The pound was last up 0.91% versus the dollar at $1.34015, having briefly touched its highest level since April 30. Meanwhile it fell 0.31% against the euro to 0.8421.
Neil Wilson, UK investor strategist at Saxo Markets, said the market seems to like the deal overall, but focus remains on the U.S. dollar.
"I feel like this is a little ripple to the main tidal wave of U.S. debt selloff and dollar-led moves - gilts are getting hammered and no amount of fish is going to fix that," he said.
The dollar fell against a range of currencies including the euro and the yen on Monday after a surprise downgrade of the U.S. government's credit rating while trade tensions also continue to weigh on the greenback.
Rising U.S. 10-year treasury yields - last up 10.5 bps to 4.54% on Monday - could have a potential knock-on effect for sterling via the gilt market, said Saxo's Wilson.
After upbeat GDP data last week boosted the pound, traders are now looking ahead to UK CPI due on Wednesday for a steer on the potential trajectory of the Bank of England (BoE). Traders are currently betting on a 25bps cut at the BoE's next meeting in June.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Telegraph
33 minutes ago
- Telegraph
Rachel Reeves only has herself to blame for this recession
Companies were hammered by a steep rise in employment taxes. Business rates went up sharply as reliefs were wound down. The living wage was pushed up, and stamp duty breaks were slashed. Against that dismal backdrop, it is probably a miracle that the GDP figures for April published today recorded only a 0.3 per cent month-on-month decline in output. The Chancellor Rachel Reeves will shamelessly try to blame that on the tariff war started by president Trump. But the blunt truth is this. The unfolding recession was entirely predictable – and she has only herself to blame. April was always going to be a tough month for anyone struggling to run a business in the UK. Employer National Insurance went up, and we saw the initial impact of that in the annual loss of 274,000 jobs in the employment data reported earlier this week. Likewise, one of the biggest rises in the living wage was imposed, and we saw the effect of that in declining hours worked in sectors such as shops and restaurants, which need lots of modestly paid staff. Business rates went up sharply, as reliefs were wound down, with many pubs facing an extra £12,000 or more in the amount that they have to pay to the local council, and closures are now running at 100 a month. Stamp duty went up as reliefs were phased out, and we have already seen the consequences of that in the 0.4 per cent decline in home prices reported by Halifax last week. In the background, industrial electricity prices have remained by far the highest in the world, forcing factories to close their doors. One by one Reeves has taken the major sectors of the British economy – property, hospitality, retailing and manufacturing – and whacked them with huge extra charges. Sure, it didn't help that the US imposed tariffs on the UK along with its other major trading partners. And yet, in reality, the sharp fall in output witnessed in April was entirely self-imposed. It took an extraordinary level of incompetence, and a breath-taking level of arrogance, to sequence such a punishing round of tax increases so that they all kicked in at the same time. It is not as if Reeves was not warned of the devastating impact of her tax rises on businesses. The M&S boss Stuart Machin called for the NI rise to be phased in back in February but was ignored. The British Beer and Pub Association called for help with business rates, but no one at the Treasury paid any attention. Rightmove called for stamp duty relief to be extended, and so did many other estate agents, but the Government didn't listen. The list goes on and on. Time and time again, businesses have told the Chancellor that her policies are killing their trade, only to be ignored. As it has turned out, however, they were completely right, and today's GDP figures have proved that. It is going to get much worse over the next few months. We have only seen the start of the fall in employment after the NI rise. After all, if your wage bill is out of control, it takes time to slim staff numbers. There are procedures to follow before you dismiss someone, and most small companies will rely on natural wastage, and simply not replace people, instead of risking the cost of an employment tribunal. Stamp duty has only just gone up, and it will take buyers a while to figure out they can no longer afford to move. Meanwhile, retail sales are falling again, and the inevitability of more tax rises on business in the autumn is deterring investment. Reeves chose to ignore the warnings that her tax raids would crash the economy. She will now have to reap the consequences of those decisions – and unfortunately so will the rest of us.
Telegraph
33 minutes ago
- Telegraph
Reeves dismisses Khan in row over police funding
Rachel Reeves has rejected claims made by Sir Sadiq Khan that her spending review will result in the number of police officers being cut. In her spending review on Wednesday the Chancellor announced a 2.3 per cent real-terms increase in police spending power. But the National Police Chiefs' Council (NPCC) said the funding settlement 'falls far short of what is required to fund the Government's ambitions and maintain our existing workforce'. Sir Sadiq, the Mayor of London, said he was concerned the spending review 'could result in insufficient funding for the [Metropolitan Police] and fewer police officers'. Asked if Sir Sadiq was wrong, the Chancellor told the BBC Radio 4 Today programme: 'I really don't accept that there needs to be cuts when we are actually increasing the money that the police force gets.' Told about the NPCC's warning, Ms Reeves said: 'The police have been allocated a budget which has a real-terms increase of 2.3 per cent a year and they now need to live within those budgets.' Making 'sums add up' Ms Reeves said the police were getting a 'substantial' increase in spending power. She told BBC Breakfast: 'That [2.3 per cent] is a substantial increase and that is for every year of this spending review period, so for the next three years. 'So there is no reason for those numbers to decline. The spending power of police is going up substantially and the spending that we set out yesterday was an average across all parts of government of 2.3 per cent a year, and so policing are in line with that average across other government departments. 'But look, I wasn't able to say yes to everything that people asked for in the spending review. People always are going to want more whether it is in health, education, defence or indeed for policing. 'But my job as Chancellor is to make sure that the sums add up and we can't spend more than we have coming in.' Senior officers have warned that a lack of funds will put at risk Labour's promises to deploy an extra 13,000 neighbourhood police officers, as well as their pledge to halve violence against women and girls and reduce knife crime. The extra funding for the police is expected to amount to just £200 million in real-terms by the end of the decade.
The Sun
33 minutes ago
- The Sun
World-famous UK city wants to introduce £5 congestion charge on EVERY car in ‘concerning' move
A WORLD-famous UK city is planning to introduce a congestion charge in a move that has led to a civil war between local authorities. Oxford is famous for its gothic spires and picturesque bridges, which attract sightseers from around the world. 1 But new plans are now underway to force drivers to pay £5 to access some areas of Oxford's historic city centre. The congestion charge, proposed by Oxfordshire County Council, would be the first new levy of its kind introduced in a British city in two decades. However, the other local authority in the region, Oxford City Council, slammed the scheme as elitist. They say there has been "no engagement" on the proposals and that the congestion charge"only allows people who can afford to do so to buy access to our streets." Speaking to The Telegraph, Susan Brown, the leader of the city council, said: 'There has been no engagement with businesses, residents or the city council until today – yet again the city is being done to rather than engaged with in preparing transport proposals. 'We are concerned that this scheme allows people who can afford to do so to buy access to our streets. Those who can't will struggle.' Oxfordshire County Council called comments from the city authority "disappointing". Campaigner Clinton Pugh, the father of Hollywood starlet Florence Pugh, told The Telegraph that the proposed scheme risked turning Oxford into a Singapore-like location in which only the wealthy could afford to drive in the city. The former restauranteur also claimed that the County Council were trying to turn Oxford into a 'cycle-only city' which would have a destructive impact on local businesses in the area. He added: 'You have got no one in the council who has any business experience and understands the impact of doing this.' In a statement, Oxfordshire County Council said: "Proposed options to manage congestion in and around Oxford will be discussed by Oxfordshire County Council's cabinet on 17 June. "Options will include a temporary congestion charge for the city. "The council has committed to addressing congestion in the short-term, after its plan to implement six trial traffic filters was postponed due to the ongoing closure of Botley Road, now expected to reopen in August 2026. "The council's cabinet will be asked to approve the start of a public consultation on a temporary congestion charge. "The scheme would improve bus services and make it easier for those with permits, including carers, traders and blue badge holders, to travel by car into and around the city. "If approved, a public consultation would start on 23 June, with a view to implementing the temporary scheme in autumn this year." Councillor Andrew Gant, Oxfordshire County Council's Cabinet Member for Transport Management, told The Express: 'We urgently need to see improvements to travel around the city; better bus services and less traffic overall, to help people get around. 'We must take action for our residents, businesses and visitors while Oxford's Botley Road remains closed and I look forward to discussing the options with cabinet colleagues.'
