Currency Note

Brexit talks, ECB meeting and US stimulus news this week

By Christopher Nye October 26th, 2020

The pound continues to be impacted by Brexit news, with talks taking place in London and Brussels this week. There are still hopes that a deal can be achieved by mid-November. However, key sticking points need to be overcome.

The ECB will hold their latest meeting this week. Due to rising COVID-19 cases across Europe, it will be interesting to hear if they have plans for more stimulus measures to boost the economy. US Congress are still in the process of agreeing the terms of their own stimulus bill, which we could hear more news about this week.

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GBP: Hopes for a Brexit deal remain

The pound is slightly weaker this morning but still near significant levels, as hope for a Brexit deal remains. Intense talks are set to continue in London this week, after the EU’s Chief Negotiator, Michel Barnier, travelled to the UK last Thursday. It is hoped that a deal will be achieved by mid-November.

Key sticking points remain, including issues over fisheries and state aid. It’s thought that talks will move to Brussels on Thursday.

It’s a light week for economic data this week, but we will see car production and mortgage figures on Thursday, as well as consumer credit figures from the Bank of England.

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EUR: ECB meeting this week

The euro remains under pressure due to rising COVID-19 cases across Europe. France reported a daily record of cases on Saturday, whilst Spain and Italy are introducing increased restrictions to help to curb the disease. This will have the potential to impact Europe’s economic recovery as we go into winter.

Business climate figures from Germany will be released this morning, followed by sentiment figures for the Eurozone on Thursday.

The ECB will also announce their latest decision on interest rates this Thursday. It will be interesting to hear if officials are planning to release more stimulus measures to help the European economy through the pandemic.

USD: Dollar strong on virus and stimulus worries

The dollar is stronger against the euro and the pound this morning, as virus worries and stimulus woes boost its safe-haven appeal.

House Speaker, Nancy Pelosi, has said that she expects a response from the White House today on a stimulus package for the US. Since negotiations were revived last week, there has been little news of how talks are progressing.

The US has recorded the highest daily number of COVID-19 cases for two consecutive days. This, coupled with rising cases in Europe, has also caused investors to opt for the dollar.

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