Currency Note

Brexit talks to resume in London this week

By Christopher Nye July 6th, 2020

Guide to Brexit

After ending a day early in Brussels last week, Brexit talks will resume in London today. After a tough week of negotiations with sticking points remaining on both sides, there are hopes that this week will bring fresh progress.

The euro is strong this morning as more positive economic data is released for the eurozone. There are also hopes that the EU will be able to finalise the details of their coronavirus recovery fund after finance ministers meet on Thursday.

Meanwhile, it’s a busy week of data for the US, with a series of PMI figures due to be released this morning.

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GBP: A mixed morning for the pound

The pound is weak against the euro and stronger against the dollar this morning, as it moves in tandem with the markets.

Sterlin is also supported due to fresh optimism over Brexit talks, which are due to resume in London this week. Despite ending last week on a low due to worries over talks finishing early, there have been reports that a ‘landing zone’ is in sight, providing the pound with a boost.

Sticking points remain between the two sides, however, there has been talks that both sides are heading towards a ‘stripped back’ deal.

We’ll see Construction PMI data later today and Labour Productivity figures tomorrow. On Wednesday, Chancellor Rishi Sunak will reveal details on how government spending will help the economy recover from the coronavirus crisis.

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EUR: Euro strong over hopes of economic recovery

The euro has strengthened this morning due to positive economic data from Germany and hopes that the EU will be able to deliver their coronavirus recovery plan.

German factory orders rose 10.4% in May. This was due to demand increasing after the country loosened restrictions to contain the spread of the coronavirus, adding to evidence that Europe’s economy is starting to recover.

On Thursday, the euro area’s finance ministers will meet to discuss details of the coronavirus recovery plan before the summit between EU leaders next week.

USD: Markets await US PMI data

Fresh market optimism has weakened the safe-haven demand for the dollar this morning, causing it to weaken.

This is due to hopes that PMI data for June, which is due to be released later today, will show a significant improvement. It is likely to reflect the reopening of the economy after lockdown, however, may not fully take into account the recent ‘rollback’ of easing due to a spike in infections.

They’ll be a series of data for the US this week, as well as speeches from Federal Reserve Officials tomorrow.

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