The Pound has continued to weaken against both the Euro and the Dollar as the EU threatened legal action against the UK if the proposed Internal Market Bill isn’t dropped. UK GDP figures released this morning showed that the economy grew 6.6% for the month of July. This is the third month in a row that the economy has expanded although it remains well below pre-COVID levels of output. Both UK manufacturing and industrial production beat the market’s expectations which has given some slight support to the Pound this morning. Trade talks with the EU will continue whilst a UK-Japan trade agreement is also being worked on today.

During yesterday’s European Central Bank meeting, all monetary policy measures were kept unchanged. However, the central bank upgraded its growth forecasts for the Eurozone. In addition, ECB President Lagarde said that there is no need to over-react to the Euro’s recent strength. This kept the Euro strong against both the Pound and the Dollar throughout the day. In addition, German final consumer price index came out as expected at -0.1% which has also given some support to the common currency.

The Dollar remains weak against a strong Euro with weekly unemployment claims disappointing the market with a release of 884K compared to 838K that was anticipated. Once again, Senate Republicans have failed to agree on a new fiscal stimulus measure to help the US economy recover from the effects of the pandemic which has kept the greenback from making gains with the exception of a weaker Pound.