The euro spiked Monday morning off of unusually hawkish comments from European Central Bank President Mario Draghi. The pound is recovering slightly from Brexit blues and the U.S.-China trade outlook looks bleak.
Euro soars on Draghi optimism
ECB President Mario Draghi said that his sees a pickup in underlying inflation, causing the EUR/USD pair to jump from 1.175 to 1.180 on the news.
Speaking before the European Parliament Economic and Monetary Affairs Committee in Brussels, Draghi said that price pressures are increasing as the tightening labor market is pushing up wage growth.
Despite the more hawkish inflation outlook, the ECB held rates steady earlier this month and still plans to hold rates through summer 2019.
Members of the ECB board, Benoit Coeure and Peter Praet are expected to speak tomorrow at separate events.
China: No talks under threats
China said it will not proceed with any trade talks as long as threats of future tariffs by President Trump exist.
The comments came after the $200 billion in promised U.S. tariffs on Chinese goods took effect Monday.
China declined the pending negotiations this week, saying that talks must be held under “mutual respect.”
Meanwhile, China is looking to influence trade through messaging domestically in the U.S., putting out an advertising supplement in the Des Moines register. The articles targeted soybean farmers in the state, stating that the U.S. trade decisions are forcing China to look elsewhere for soybeans.
The pound slowly climbed higher Monday morning after U.K. Brexit Secretary Dominic Raab expressed optimism in getting a good deal.
GBP/USD increased from 1.307 to 1.316, before settling down around 1.313.
The pound plummeted Friday after Prime Minister Theresa May’s Brexit deal was rejected by the E.U. in Salzburg.
May is now facing resistance among her own party, which wants a plan involving a much cleaner break with the E.U. The opposition Labor Party is holding its annual meeting in Liverpool this week and plans to decide whether to back a second referendum vote.
Labour party leader Jeremy Corbyn said he would rather have a general election.