Sterling was hammered across the board yesterday as fresh Brexit anxieties outweighed an upbeat UK retail sales report.

Demand for the Pound was significantly hurt by comments from British trade minister Liam Fox suggesting that the country could get by without a post-Brexit EU trade deal. Economists believe that such a scenario would have a crippling effect on the UK economy. Indeed, British chancellor Philip Hammond recently stated that not getting a new trade deal would be a ‘very, very bad outcome’, while King’s College London’s Brexit research group suggested a chaotic Brexit would ‘spawn a political mess, a legal morass and an economic disaster’.

The latest Brexit storm completely overshadowed a relatively upbeat UK retail sales report, which saw sales volumes jump from 0.6% to 3.0% in June.

Pound to Euro Exchange Rate Skids to 8-Month Low on ECB President Draghi’s Autumn Policy Hint

The Pound to Euro exchange rate plunged -150 pips to strike an eight-month low yesterday as investors reacted to comments from European Central Bank President Mario Draghi.

The ECB left rates and its €60 billion per month quantitative easing scheme unchanged yesterday, even going as far as leaving the door open to additional asset purchases in the future. However, traders ignored the largely dovish elements of the ECB presser and focussed on Draghi’s suggestion that policymakers would discuss the notion of winding down QE during ‘the autumn’. Despite comments on subdued inflation and heaps of rhetoric on the need to be ‘persistent, patient and prudent’ with monetary policy, markets saw the autumn admission as a sign that ultra-loose ECB policy would start to be unwound over the next 12 months – most likely in the New Year.

The single currency soared across the board, making strong gains against the Pound following Draghi’s statement. However, it is possible that ECB officials could attempt to highlight the need for stimulus over the coming days, and this could potentially lend GBP/EUR a much-needed helping hand.