Rumours have emerged that the UK and EU have agreed to a compromise over the level-playing field issue and will now focus efforts on fisheries, with both Prime Minister Johnson and European Commission President von der Leyen both vowing to defend fishermen rights. The Bank of England is predicted to leave interest rates unchanged without announcing any further monetary measures. The Pound remains buoyant with the lack of comments from both the UK and EU seen as a good sign of progress.
The Euro remains weaker against the Pound but has held up against the Dollar. Even though Eurozone flash manufacturing and services data came out better than expected yesterday, the market has chosen to pay more attention to stricter lockdown measures in Germany and what economic impact that may have on Europe’s largest economy.
Yesterday, US retail sales disappointed the market with a release of -1.1% compared to -0.3% that was forecast which weakened the Dollar further. Federal Reserve Chairman Powell has mentioned that the case for fiscal stimulus to be introduced by the US government is ‘very strong’. Lawmakers have once again commented that they are close to coming up with a fiscal stimulus package which could be announced as earlier as today. This has kept the Dollar weak against both the Pound and Euro.