Sterling managed to find some support in early trading after the release of monthly retail sales data which recorded a strong growth of 12% in May. This surpassed consensus estimates by a wide margin and has come as some relief after the blow it received from the Bank of England meeting on Thursday. At yesterdays meeting, the Monetary Policy Committee announced that it had kept interest rates unchanged at 0.1% and had increased the purchase program (QE) by £100 Bln which was in line with expectations. However, some elements of the accompanying statement were dovish in tone which undermined the pound.

The dollar is on track for its best week in month, as a resurgence in coronavirus cases and US/China tensions drove invertors to the safe haven currencies . President Trump renewed his threat to cut ties with China a day after the first high level talks between the countries in months. This came after many US states reported rising hospitalisations, reflecting a national trend that has seen daily infection numbers rising after more than a month of declines.

All focus will be on today’s EU summit, where the leaders of the 27 member states will try to narrow their differences over the coronavirus economic recovery plan. German Chancellor urged leaders yesterday to try to get a deal done by the summer break, but senior E.U officials warned that more countries have a problem with the plan than the so called “frugal four“ of The Netherlands, Denmark, Austria and Sweden.