Pound to euro exchange rate - sterling SINKS to eight month low over Brexit bill ROW
POUND sterling has dived against the euro as leaders clash over the amount Britain owes to the EU for Brexit.
Barnier slams UK for not accepting Brexit bill
The exchange rate has tumbled to €1.114, the lowest level seen since last November.
Sterling dived from €1.132 early yesterday morning after the UK and EU fought over the Brexit bill.
Some estimates suggest the bloc has demanded up to £90 billion in the divorce.
The British government has agreed it has debts to the European Union but the debate between the two sides surrounds just how much is outstanding.
EU chief negotiator Michel Barnier warned British peers the EU will go into meltdown as the result of an economic “explosion” caused by the UK refusing to pay any Brexit bill.
He said there would be total chaos across the continent with thousands of publicly financed programmes having to be scaled down or scrapped.
The Frenchman’s candid remarks came in newly published transcripts of evidence he gave before the House of Lords EU Committee, which grilled him during at a special meeting convened in the Belgian capital last week.
But former Ukip leader Nigel Farage described it as a "ransom" note in the EU parliament, insisting the UK does not owe “a penny piece” as the row over the Brexit bill rumbles on.
The conflict sent the pound on a downward spiral as the market reacted to renewed uncertainty.
Fresh Brexit concerns and the European Central Bank (ECB) interest rate decision left sterling spiralling lower
Fears have also emerged about the possibility that Britain may not establish a trade deal with the bloc before negotiations are complete.
TorFX currency analyst Laura Parsons said: “Fresh Brexit concerns and the European Central Bank (ECB) interest rate decision left sterling spiralling lower on Thursday, with the GBP/EUR exchange rate dropping to an eight-month low.
“Fears that Britain's Brexit negotiations could conclude without a trade deal being established prevented the pound from benefiting from upbeat retail sales figures early in the day.”
The pound was further weakened by a climbing euro, which gained ground after an update from the European Central Bank (ECB).
Traders shrugged off the bank’s concerns about low inflation and refusal to scale down its money-printing programme.
Instead the single currency strengthened in the wake of the comments.
Ms Parsons said: “The euro then surged after ECB President Mario Draghi implied that stimulus discussions would begin in the autumn.
“Further GBP/EUR losses could be on the cards if today's UK data disappoints.”