EUR/GBP falls and breaks through the lows around 0.9270. Now, the weaker tone around the single European currency encourages the pair to retreat. The pound managed to regain its composure after the indicators of the UK labor market surprised in a good sense of the word. The actual average income of the British rose in June by 3.7% year-on-year, while the unemployment rate was only 3.9%. The number of applications for state unemployment benefits in July increased by 28.0 thousand applications: this is below expectations and June figures. On the other hand, the British pound is still wary of news headlines about Brexit, where the probability of a "no-deal" is growing. There are also rumors surrounding Brexit about the possibility of early elections shortly before October 31 in case Prime Minister Boris Johnson will lose his former self-confidence.
The forecast for the British pound is weak, especially given the growing chances of Brexit "without a deal" on October 31. Meanwhile, the closer the exit, the more acute the Irish question. The border between Northern Ireland and the Republic of Ireland will be the only land border between the UK and the EU, and the exit will mean the return of the physical border with the necessary infrastructure and customs control. In this regard, there are fears that such a rigid border could cause another surge of Irish separatism. Given the weak GDP data for the second quarter, the outlook for the economy and the currency is bleak. At the same time, the Bank of England left the policy unchanged and refuses to take into account the "no deal" scenario in its forecasts. The regulator is still preparing to raise the rate to achieve inflation.