The pound is still volatile as the EU summit continues today. So far, EU leaders have called on the UK to make the necessary moves and concessions to reach a trade deal. Following this, the Prime Minister is expected to reveal what the UK’s next steps will be, which could impact sterling.
Rising COVID-19 infection rates and increased restrictions across Europe are weighing on the euro this morning. The dollar remains strong due to its safe-haven appeal, as virus worries, US stimulus woes and jobless claims data come into play.
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GBP: Focus turns to Prime Minister’s verdict
The pound is still volatile this morning as it reacts to news from the EU summit. It weakened early this morning on news that EU leaders said that negotiations should continue, but added that the UK should make the concessions necessary to strike a deal.
The UK’s Chief Negotiator, David Frost, said he is “Disappointed by the European Council conclusions on UK/EU negotiations. Surprised EU is no longer committed to working “intensively” to reach a future partnership as agreed with Ursula von der Leyen.” He also added that he was “surprised” by the suggestion that all future moves should come from the UK.
The Prime Minister is expected to set out the UK’s next steps today, following the comments from EU leaders. It’s likely that the pound could respond to any announcement.
EUR: Rising COVID cases impact euro
Growing COVID-19 cases across Europe have started to weigh on the euro. Countries are trying to avoid national lockdowns but more restrictions have been put into place this week, including France placing a night time curfew in cities and restaurants closing in Barcelona. There have also been reports that Germany is struggling with contact tracing.
Balance of Trade data for August and inflation rate figures for September will be released for the Euro Area today. The Eurozone consumer prices are expected to fall 0.3% from a year earlier in September 2020.
USD: Dollar strengthens on virus fears
The dollar is still strong this morning, still benefitting from virus fears and stimulus woes. A spike in COVID-19 infection rates on both sides of the Atlantic has prompted investors to opt for safe-haven currencies, such as the dollar.
Adding to this strength was US jobless claims data, which came in yesterday. The 4-week moving average of US initial jobless claims rose to 866,0000 in the week ending October 10th, the first increase in almost three months.
There are more data releases today, including retail sales and industrial production figures.