UK Chief Negotiator Frost has said that there has been ‘very little progress’ in the latest round of post-Brexit trade negotiations with the EU, but does believe that a free trade agreement can be completed by the end of the year. His European counterpart Barnier believes that the UK are ‘not realistic’ in their demands and suggested that the EU are stepping up preparations for a no-deal scenario.
As a result, the Pound weakened further against both the Euro and Dollar as analysts started to price in a higher possibility of a stalemate between the two parties.
The German economy contracted by 2.2% in Q1 2020 which is its biggest fall since 2009, pushing Europe’s largest economy into a recession. It is expected that April will also be a low point for Germany, whilst the start of a recovery should be seen in May. The Eurozone as a whole saw an economic decline of 3.8% for the same time period. Italy and Spain are amongst those European countries that will further ease lockdown restrictions today. The Euro has made gains against a weak Pound but is trading in a range against the Dollar.
US retail sales came out much worse than expected on Friday at -16.4% compared to -12.0% that had been predicted. However, both industrial production and manufacturing data surprised the market with some better than expected readings. President Trump’s economic advisor Kudlow has suggested that cutting corporation tax in half could be a way to bring manufacturing back into the US from China. The Dollar still remains in high demand, making significant gains against the Pound.