Unexpected cooling on the UK‑EU line
The June‑scheduled UK‑EU summit may be postponed, Bloomberg reports.
The agency stresses that trade negotiations "have hit a deadlock", and their resumption is hampered by the political shock caused by the weakening support for the British prime minister, Keir Starmer.
Read also: British pound weakens. Starmer loses power, new UK prime minister's name announced?
"The meeting in Brussels was to take place next month, but according to British and European officials it "may be postponed as early as July", Bloomberg said.
"Some pointed to the likelihood that key agreements would not be reached on time; others said that Starmer may be seen as too weak to offer the concessions needed for progress in talks", the agency added.
British officials also have to note the lack of confidence from Brussels in maintaining Starmer's stance.
The final meeting date will be confirmed "in due course" this summer.
Prime Minister of the United Kingdom announced a fight for leadership in the Labour Party, which may also be contested by Andy Burnham, mayor of Greater Manchester.
Starmer, according to BBC, believes the party should "unite and fight" in the by‑elections scheduled for 18 June.
Data from YouGov show that 23% of Britons rated the prime minister positively in May, while three times as many (69%) spoke negatively about him.
Source: YouGov.
Read also: Dollar rate on a long road to 4 PLN? Expert issued forecasts for USD/PLN and EUR/USD. "The dollar may gain"
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British pound, euro and dollar rates. Forecasts
The British pound to dollar rate on Friday, 22 May is at 1,34 USD.
Economists at Crédit Agricole maintain a "cautious forecast" for the GBP/USD pair.
"The British pound may remain a key safety net for concerned market participants who fear negative consequences of potential political and budgetary turmoil in the UK", they said.
Analysts concluded that the pound "may be vulnerable to declines" if the persistent stagflation risk stokes concerns among Britons.
"Bank of England may not be able to support the UK economy or help ease the government's fiscal burden. We believe, however, that some negative factors are already priced into the pound, especially against the euro, given that the eurozone would also have to face the consequences of a negative oil supply shock", they added.
The report also noted that the "pound appears to be already quite overbought, while global investors seem to invest too little in UK assets".
Chart. Pound to dollar rate (GBP/USD)
Source: Trading Economics.
The euro to pound rate reaches 0,86 GBP.
Chart. Euro to pound rate (EUR/GBP)
Source: Trading Economics.
The pound to zloty rate hovers around 4,91 PLN.
Chart. Pound to zloty rate (GBP/PLN)
Source: Trading Economics.
Read also: Dollar rate before a breakout? Expert: "Capital will flow back to USD"
See also: Dollar rate before a "nervous and dynamic" move, euro waiting to fall? Expert issued a forecast for USD/PLN and EUR/USD
Source: Bloomberg, BBC, YouGov.
