Although it initially looked like an unremarkable week, the past five days have actually been packed with EU Referendum developments and the GBP/EUR exchange rate has fluctuated accordingly.
The Pound’s movement against the Euro has been positive overall, with Sterling ultimately rising from around 1.2671 on Monday to a closing rate around 1.2708 on Friday.
PM’s Warnings of War Dominated Monday and Opened a Week of ‘Brexit’ Arguments
EU Referendum comments dominated headlines on Monday after remarks were made on Sunday by a variety of sources. Science-based companies such as Pfizer and AstraZeneca wrote an open letter warning of risks to research if the UK left the EU, while former Head of MI6 Sir John Sawers warned that UK security would be harmed by a ‘Brexit’. This argument was reinforced by five former NATO chiefs, who also published an open letter.
The biggest news at the start of the week, however, came from the Prime Minister himself, who stated that the UK’s membership in the EU was an integral part of keeping peace among the other members. The PM pointed out previous instances where a lack of UK involvement in Europe had turned out negatively, citing the beginning of the Napoleonic and First and Second World Wars as examples.
In retort to these claims, Former London Mayor Boris Johnson argued that the PM’s UK-EU relationship renegotiations in the first place had failed and that the arguments for an ‘In’ vote were deeply flawed.
Other contributions to the debate were Vote Leave’s assertion that a tariff-free trade agreement with Europe would be possible after a ‘Brexit’ due to the UK’s ‘unique position’, while an Ipsos Mori survey showed that around 50% of European respondents thought that further EU membership referendums would take place across the EU if the UK left.
The Pound briefly spiked against the Euro, before later slipping.
Tuesday’s IDS Denouncement of EU and BCC Update on Polling Figures Impacted GBP
Tuesday saw a more restrained level of ‘Brexit’ news, consisting mainly of economic forecasts and a fiery denunciation of the EU by ‘Out’ campaigner Iain Duncan Smith. The former Work and Pensions Secretary claimed that the EU only favoured the better off and was a ‘force for social injustice’.
Another major story came from the British Chambers of Commerce, which published figures showing that while most of its members still backed an ‘In’ vote, the gap between the two percentages had narrowed in recent months.
Elsewhere, Labour leader Jeremey Corbyn appealed for his party supporters to vote ‘Remain’ and National Institute of Economic and Social Research (NIESR) Principal Research Fellow Jonathon Portes estimated that it would be ‘extremely difficult’ for immigration cuts to be put into practice in the event of a ‘Brexit’. This comment came alongside an official NIESR report, which stated that ‘A vote to leave the EU would represent a significant shock to the UK economy’.
Former PM Brown Entered the Fray on Wednesday while Former Mayor Launched ‘Battle Bus’; Sterling Dipped on Uncertainties
The middle of the week saw a strong statement in favour of the EU coming from former PM Gordon Brown, who backed Jeremy Corbyn’s earlier ‘In’ supporting comments. Brown’s argument also built on the PM’s earlier assertions that the EU was holding Europe together, not pulling it apart, stating that there had not been a major armed conflict in Europe since the end of World War 2 and the formation of a post-war multination union had been a positive step for peace.
Far from the capital, ‘Leave’ campaigner Boris Johnson started his own campaign to get the UK out of the EU by beginning his tour of the country in Cornwall, where the much-trumpeted ‘battle bus’ got underway. The vehicle itself was a source of some embarrassment for the former London Mayor, when it was revealed that it had been made in Germany and that the prominent claim printed on the side that ‘We send the EU £350 million a week’ was ‘potentially misleading’.
Other notable occurrences in the debate were assurances from Chancellor George Osborne that the government was undergoing ‘contingency planning’ to have measures in place if a ‘Brexit’ vote happened, as well as the news that David Jones would be leading the Welsh Vote Leave campaign.
The issue of the UK’s potentially reduced security after a ‘Brexit’ was once again raised, this time from former MI5 head Dame Eliza Manningham-Buller.
Apparent BoE Intervention in Debate and Clash over ITV Choices on Thursday, GBP Turned Bullish
Yesterday’s EU Referendum news was dominated by comments given by the Bank of England (BoE), although as with other days, there were still a number of lesser contributions to the overall debate.
Sticking with the BoE statements, Governor Mark Carney appeared to break the central bank’s required neutrality on the Referendum debate by issuing his starkest warnings on the possible outcomes of the vote yet. In the event of a ‘Brexit’, Carney argued, the UK could slip into a state of recession, the Pound could dive in value and over-inflation might combine with rising unemployment to seriously harm the UK’s economy.
The statements were backed by the PM and the Chancellor, although ‘Leave’ supporters labelled Carney as ‘hysterical’ and some even called for his resignation.
Ironically for the gloomy forecast offered, the BoE was actually responsible for the Pound jumping up against the Euro due to the fact that none of the 9 voting policymakers thought that an interest rate cut would be advisable.
Elsewhere, ITV found itself under threat of ‘consequences’ from Boris Johnson and other Vote Leave members when the broadcaster attempted to stage a debate between the pro-EU PM and unofficial ‘Out’ group Leave.eu, instead of the officially chosen Vote Leave.
Johnson made other contributions on Thursday when he stated that the PM should remain in place after a ‘Brexit’ vote, in the interests of maintaining stability.
Today: Warnings of Party Shift from Former PM Major, Blunt Anti-‘Brexit’ Stance from IMF’s Lagarde
The last day of the week for EU Referendum news hasn’t been a quiet one, with input coming from both the International Monetary Fund (IMF) and from former PM John Major.
In the former case, IMF head Christine Lagarde has been showing that neutrality is no such issue to her comments by damning the idea of a ‘Brexit’ vote. Lagarde has essentially reinforced yesterday’s arguments made by Mark Carney, additionally adding that she has seen ‘[nothing] that’s positive’ about a vote to leave the EU.
Finally, John Major, in his support of an ‘In’ vote, has stated that Conservative backers of a ‘Brexit’ could end up turning into UKIP supporters, due to both groups putting unhealthy emphasis on immigration.
The Pound has lost its gains against the Euro and other peers today, proving that its exchange rate rally was only temporary.
That’s it for the UK Referendum roundup this week, but we’ll be back next week with all the latest UK-EU news to keep you up to speed with the debate as it progresses.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.2705 and the Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7871 today.