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ECB chief Draghi issues Brexit threat as UK factory growth smashes forecasts

ECB chief Mario Draghi followed in the footsteps of Brussels by issuing a direct threat to the UK over Brexit as Greece agreed a new austerity deal that will cut pensions.

Italian ECB chief Mario Draghi is warning of a “channel of economic consequences” over the UK’s decision to leave the European Union and said that “we should not think it’s over” after the first round of talks in Downing Street last week.The pound is staying firm on the dollar and euro from its lows of €1.12 and $1.20 in November 2016  as markets look towards Brexit, the French elections.

Factory growth is up in the UK and has reached a three year high as the country continues to move forward with its Brexit strategy.

Mr Draghi who is continuing his bond buying spree signalled uncertainty for the pound and euro and insisted what goes forward “will depend on the shape of the final negotiations and how long they take.”

However his rhetoric could backfire with bullish speculators and futures markets pointing to continued strength in the UK.

A meeting between Russian President Vladimir Putin and German Chancellor Angela Merkel in Sochi today is also expected to drive markets.

£1 = €1.18 / $1.28 – GBP

Mario Draghi has issued tough word over Brexit GETTY                   Mario Draghi has issued tough words over Brexit


Banks are feeling positive about the UK’s factory data and believe it shows that there could be confidence in the post referendum pound which is helping to bolster growth and exports.Mike Rigby, Head of Manufacturing at Barclays: “The UK economy as a whole may have made a sluggish start to the year but following a solid first quarter, manufacturing continues to grow with healthy order books and encouraging levels of new investment and employment.

“Despite some easing, inflationary pressures will continue to take their toll on factory gate prices and ultimately manufacturers’ margins, however, the weakness in sterling and an improving global outlook continue to provide export opportunities for the sector.

“What we don’t want to see now is the prospect of fractious Brexit negotiations fostering a more cautious and uncertain approach to investment from the sector.”The Brexit pound could be having a direct impact on manufacturing says Dave Atkinson, UK head of manufacturing at Lloyds Bank Commercial Banking, said: “The manufacturers we’re speaking to are confident but cautious and even the prospect of a general election in five weeks’ time does not seem to have worried them unduly given the result will mean a government in power until 2022. This mood appears to be reflected in the PMI data.

“While the pound remains weak and is undoubtedly pushing up import costs, we are seeing a spike in businesses seeking support to export and capitalise on overseas buyers’ appetite for goods priced in sterling”.

Manufacturing is on the up as Brexit pound helps with exportsGETTY               Manufacturing is on the up as Brexit pound helps with exports


An agreement has been struck in Greece with a new bail out package following their requests for aid since last December however it appears to be a temporary measure as pensioners became the victim of the fresh austerity drive.According to local reports Greek Prime Minister Alexis Tsipras has agreed to cut pensions by as much as 18 per cent.

The agreement was made after 12-hour talks with pensioners seeing their main and supplementary pensions slashed by up to 18 percent.

The charts over the past 180 days look bullish for Britain exchangerate.org.uk


The charts over the past 180 days look bullish for Britain

The finance ministry is estimating an average of 9 percent cuts across the board.And main pensions will be re-calculated and will be capped by 18 percent in cuts.

The tax-free income threshold will hit 5,681 euros for single individuals and go up to 6,700 depending on number of children in personal taxation matters for the general population.

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Opposition leader Mitsotakis: Tsipras government got Greeks more austerity without any additional funding

 Greek opposition leader Kyriakos  Mitsotakis fumed: “The second review (of the Greek bailout program) is the Waterloo of (this government’s) miserable rule.
“The measures that appear to have been decided are painful for all Greeks, especially the weakest, violating every ‘red line’ of the government … the delay in the negotiation had and has a huge cost for the economy, whereas the government has committed the country (to more austerity) for years without gaining anything of substance for the debt and primary budget surpluses”.

GBP to USD over the 180 days shows a climbGETTY              GBP to USD over the 180 days shows a climb


Putin and Angela Merkel will go head-to-head today during groundbreaking discussions on counter-terrorism, Ukraine and Syria.In 2012, the two nations’ collective trade turnover was £68 billion.

In the wake of the Ukraine crisis, the trade level dropped to around £35 billion in 2016, but this has surged by around 40 per cent in the first two month of 2017, perhaps showing signs of a thaw in relations.

It is not clear what time the meeting will take place but they are set to have two separate discussions followed by a press conference.

http://www.express.co.uk/finance/city/799003/Pound-sterling-live-euro-Greece-austerity-trade-talks

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