Brexit puts pressure on the British pound, which complicates the situation in the labor market, as the production of cars, for example, will be charged a 10% additional tax, which in this case could push manufacturers to shift their production to Europe in order to avoid a rise in the price of products and the loss of potential customers, which will undoubtedly lead to a reduction in production and job cuts at factories and have a negative impact on the economy. According to some projections at this point, if there is no trade agreement reached between the parties, the UK in 10 years may lose more than 150 billion in revenue, but negotiations have not even started. Also, manufacturers in Europe are afraid of losing the UK market, as it is the second largest in Europe.
For the dollar this week was not very successful; at the moment the dollar is losing against a basket of major currencies and the dollar index is close to the December lows of 2014. The stock market is trying to win back losses while bond yields rose - this discrepancy may be caused by the growing difference between the budget and current expenditure.
The euro strengthened against the background of political stability in the region and the improvement of the trade balance and thus continues to attract investors. Because of this, the EUR/USDr could soon head to around 1.26 and continue the rally.
