Good morning,
The British pound continued to be guided by sellers at the open in Asian trading, falling below 1.10 against the euro and losing over 2.1% for the week in total. At the open in Europe however, a near half cent gain was pulled back. GBP also continues to be the worst performing major currency in 2020 as it is still exposed to a number of uncertain factors; the economic recovery from Covid-19, Brexit trade negotiations, and Bank of England policy to aid in the stimulation of the UK. With the UK seemingly dragging behind the other world economies who have managed to reopen theirs, traders will be looking to Friday’s data release for retail sales in closer detail than normal. The monthly reading should be an improvement, as more physical shopping locations opened.
Across in Europe, leaders will be entering into a fourth day of discussions and negotiations into the recovery fund to aid in the fallout from the Covid pandemic. There is still a large difference in opinions for the €750bn package and how it should be issued. The leaders kicked off the meeting in Brussels on Friday, with an aim to plan out the budget over the next 7 years, as well as the recovery fund. The sticking point is reported to be where the large amounts, which are being sent to individual countries, should be made as repayable loans and not grants, which is what the plans have been drawn up as. Dutch Prime Minister, Mark Rutte, said the talks are “close to failure” and talks could still “fall apart”. It is also being reported that tempers flared, with French President Emmanuel Macron threatening to walk out. Despite this, the market is still confident that the deal can be pulled over the line. EURUSD is currently sitting at 1.1445 at the time of writing, with the talks continuing from 14:00 GMT today.
Have a great day.
Author: Jack Nicholls, Relationship Manager
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