The UK has announced that it is aiming to sign an ‘in principle’ trade agreement with Japan by the end of this month in order to avoid further delays, which gave the Pound a boost on Friday morning. However, the Financial Times has reported that the EU has warned the City of London that it may have to wait until next year to see if it will have access rights to the EU market which wiped out any Sterling gains made earlier on. The number of new coronavirus cases on Friday hit 1,441 which is the highest level since 14th June. UK-EU trade negotiations are set to restart today and will be closely watched by the market all week for any comments from either party.
Eurozone flash GDP data released on Friday morning came out as expected at -12.1%. German finance minister Scholtz has proposed an extension to the current job subsidy plan which would be worth EUR 10bn. The German economy minister has suggested that there will be strong economic growth in Q3 2020 with the economy reportedly seeing a recovery since May. This has given the market some optimism around Europe’s largest economy which in turn has given the Euro some support.
US retail sales disappointed the market with a release of 1.2% compared to the forecasted figure of 2.0%. In addition, industrial production data also just missed predictions at 3.0%. As a result, the Dollar struggled to make any meaningful gains against the Pound and the Euro. US-China trade talks aimed at reviewing the phase one trade agreement between the two countries were postponed, whilst President Trump has kept the door open to banning other Chinese-owned companies such as Alibaba which has weakened the Dollar further. To add to this, FOMC member Kashkari has said that the US needs to be shut down in order to beat the coronavirus which is currently ‘out of control’.