EUR GBP Lower on Trade and Northern Ireland

The EUR GBP exchange rate was -0.33% lower on Monday after trade surplus figures for the eurozone were hit by energy costs. The pound sterling also got a boost as fears over an imminent triggering of the Northern Irish Article 16 faded. A speech from the BoE’s Haskel also suggested some caution over the labor market.

The EUR v GBP is trading at 0.8500 after a Monday slump with UK employment ahead today.

Eurozone trade figures hurt by soaring energy costs

The eurozone trade surplus was lower year-on-year in September as the cost of importing energy soared.

Eurostat said the unadjusted trade surplus of the 19 euro countries was 7.3 billion euros in September, down from 24 billion in September 2020. Adjusted for seasonal variations, the surplus was 6.1 billion euros.

The eurozone energy trade deficit widened to 176 billion euros in the January-September period form 119.9 billion in 2020. That was driven by a growing deficit with Russia, the eurozone’s main gas supplier, with a jump from 13 billion to 43 billion euros.

Meanwhile, the eurozone’s trade surplus with the UK continued to rise, reaching 105.3 billion euros in the nine months of 2021, up from 77 billion a year earlier, with exports rising 4.5% and imports falling 16% in that period.

Haskel hints at BoE caution on UK economy

Bank of England policy maker Jonathan Haskel was cautious on the UK economy as the debate rages about whether to raise interest rates in the UK.

Speaking at a Resolution Foundation event, Haskel said that the economy was “firing on two cylinders” and that it’s “too early to declare success” in lifting furloughed workers back into jobs.

The speech didn’t focus on monetary policy however his comments add another layer of caution to the bank’s thinking after the recent surprise in not lifting interest rates.

Haskel also said that uncertainty over Brexit had added to a drop in business investment, and that there may be a permanent reduction in trade.

“One thing that did not help in investment was, of course, Brexit, and all of the agonies and so forth around the process of Brexit,” Haskel said. “From an economic point of view, all the uncertainty that led up to that, the series of cliff edges around the negotiation of the withdrawal agreement, were really bad for investment.”

In other Brexit-related news, the pound sterling was boosted by comments from Boris Johnson’s spokesperson that pulled the Northern Ireland talks back from the brink.

“There are significant gaps between our positions. But again, we are going to be continuing talks, intensified talks, between the two teams to try and find a consensual solution. I wouldn’t say seek to put a time limit on it. I think the most important thing is to not place a time limit on it which could hinder potential progress,” the Prime Minister’s spokesperson said.

There had been fears of an imminent triggering of Article 16 after the climate summit.

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