The euro has started the trading week on the front foot, despite the largest Eurozone economy, Germany, reporting worse than expected readings on factory orders. Despite the outcome, the release shows an enormous uplift in activity compared on a month-by-month basis whilst the continent was starting to ease lockdown restrictions. Since the open in Asia, the GBPEUR exchange has moved near 0.5%, which could be a worry for GBPEUR buyers. Later in the morning, we also have retail sales data released for the Eurozone as a whole. A positive reading could continue to extend EUR gains, with the key 1.10 level moving back into focus against the pound. As Josh mentioned last week, it is important to also keep a long-term view of currency pairs, considering technical data on the charts.
This week will also see the Brexit trade talks resume, making Sterling vulnerable to any headlines indicating which way the talks are heading. It has been reported by Bloomberg that both sides are focusing on a “landing zone” where they have both made concessions to reach an agreement. This lift in mood, coupled with intensified negotiations, could give GBP a much-needed boost to reverse the downside movements we have recently seen.
At 14:00 BST today, USD linked data will be released, showing business conditions in the US and is expected to be a healthy reading showing positivity in the world’s largest economy. This release is for non-manufacturing and could give USD some strength heading into the afternoon.
Early tomorrow morning, we will also see the Reserve Bank of Australia release their interest rate decision. It is widely expected that rates will remain at 0.25%, but, as always, markets will be looking at the following press statement to gauge the outlook for Australia over the coming months.
As one of the countries who has fared best with the COVID outbreak, analysts and investors are hoping for bullish statements with improved sentiment. At the time of writing, GBPAUD is sitting below a very key 1.80 level, which could be compounded further depending on the tone of speech.
Have a good day,
Author: Jack Nicholls, Relationship Manager
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