After enjoying the after effects of an agreement on the Brexit divorce bill last week, the pound found itself on shakier ground this week.

1. Euro Weekly Market Report- 15th
December 2017
After enjoying the after effects of an agreement on the Brexit divorce bill last week, the pound found itself on shakier
ground this week. David Davis’ comments that the deal would be “Canada plus plus plus,” was immediately
contradicted by the EU. Inflation was reported at 3.1%, requiring the Bank of England governor to write to the
chancellor. Later in the week, parliament took back control of the Brexit process when it voted narrowly in favour of
an amendment that will give it the final say in approving Downing Street's deal with the EU. Although this adds a
further layer of potential uncertainty, investors eventually decided it was a positive outcome for sterling, which was
an average of 0.2% higher on the day. This is likely to be because they were relieved that it was more likely to result in
closer future involvement with the single market. Investors have never been keen on the prospect of Britain "crashing
out" of its relationship with Europe and they saw yesterday evening's vote as diminishing that prospect.
The euro had a more positive and straightforward week. The European Central Bank (ECB) has lifted its economic
growth forecasts as growth across the eurozone picks up. It now expects the eurozone's economy to grow 2.4% this
year, ahead of its previous guidance of 2.2%. The bank also kept its main interest rate at zero and confirmed its asset
purchase programme would drop from €60bn to €30bn a month in January. The bank also raised its GDP growth
forecast for next year to 2.3% from 1.8%, and for 2019 to 1.9% from 1.7%.
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