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Great Britain Pound Has Muted Reaction to Court Ruling

October 7, 2019 at 13:40 by Vladimir Vyun

A column of 50 British pound notesThe Great Britain pound opened sharply lower today, though by now the currency has trimmed losses against most of its rivals. The main negative factor for the sterling remains the Brexit drama, though Monday’s macroeconomic data was also unfavorable to the currency.

The major piece of news from Great Britain today was the ruling of the Scottish court that there is no reason to legally force the British government to seek a Brexit delay from the European Union. The court reasoned that the government made a clear pledge to write a letter to the EU seeking an extension if a deal is not made by October 19 as required by the so-called Benn Act. Such reasoning means that the ruling does not necessarily increase chances for a hard Brexit, limiting the impact of the news on the sterling.

Meanwhile, British Prime Minister Boris Johnson complained that Britain has made big concessions already and the EU needs to match them if it wants to have a deal. Johnson also criticized the EU officials for not being clear why they do not accept proposals of the British government:

What we’d like to hear from you (the European Union) now is what your thoughts are. If you have issues with any of the proposals that we’ve come up with, then let’s get into the detail and discuss them.

The issue is, what is the EU’s objection to that, what is their suggestion, where are they coming from? We haven’t really heard the detail from them about what they think the problems are.

As for macroeconomic data, the Halifax House Price Index fell 0.4% in September from the previous month, while analysts had expected an increase at the same rate. The annual growth was at 1.1% — slowest since April 2013.

Like-for-like retail sales reported by the British Retail Consortium dropped 1.7% in September from a year ago. That was a bigger drop than 0.8% predicted by analysts and 0.5% registered in the preceding month. Helen Dickinson, Chief Executive at BRC, commented on the result:

With the spectre of a no-deal weighing increasingly on consumer purchasing decisions, it is no surprise that sales growth has once again fallen into the red. Many consumers held off from non-essential purchases, or shopped around for the bigger discounts, while the new autumn clothing ranges suffered from the warmer September weather.

GBP/USD wast 1.2306 as of 18:09 GMT today after closing at 1.2332 on Friday and opening at 1.2301 on Monday. EUR/GBP rose from 0.8907 to 0.8921. GBP/JPY climbed from 131.22 to 132.01 after closing at 131.82 during the previous trading session.

If you have any questions, comments, or opinions regarding the Great Britain Pound, feel free to post them using the commentary form below.

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