Brexit Latest: 'Hundreds of Thousands of Jobs' at Risk - German BDI
Brexit Latest News and Sterling Technical Analysis
- German growth may fall to 1% on a No Deal Brexit.
- Sterling remains calm as PM May tries to find a common ground.
EURGBP Weak as German Business Group Warns of Serious Economic Impact.
The powerful German BDI industry body has highlighted the dangers to the German economy of a No Deal Brexit, warning that ‘any lack of clarity would jeopardize tens of thousands of businesses and hundreds of thousands of jobs in Germany, and more particularly in the UK’. BDI chief executive Joachim Lang highlighted that if the UK ‘crashes out’ then bilateral trade with Germany worth 175 billion euros would be at risk. And in subsequent commentary, BDI president Dieter Kempf said that if there are major disruptions to trade between the UK and the EU, the German economy would grow by just 1% in 2019, compared to expectations of 1.5% in the event of an orderly Brexit. Official data released on Tuesday this week showed the German economy expanding by 1.5% y/y in 2018 – a five year low – compared to 2.2% in 2017.
The daily EURGBP price chart shows how Brexit negotiations are affecting the EU compared to the UK. The recent positive sentiment seeping into Sterling has reversed some of the losses seen since the UK decided to leave the EU and the chart remains negative for the pair, although short-term oversold signals are starting to flash. EURGBP trades just below the 50% Fibonacci retracement level at 0.8860 and is eyeing the 0.8800 (61.8% Fibonacci) to 0.8810 (November 28 spike low) area. The pair also trade below all three moving averages, while the 20-dma is looking to break below the 50-dma, setting up another potential negative wave.EURGBP may find some support in the short-term from the RSI indicator which is back at its lowest level since November 8 and close to oversold territory.
I discussed EURGBP with DailyFX analysts @MartinSEssex and @JMcqueenfx at a special Brexit Roundtable Webinar yesterday, along with range of other UK asset classes.
EURGBP Daily Price Chart (March 2017 – January 17, 2019)
--- Written by Nick Cawley, Analyst
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