The UK and EU will resume post-Brexit trade negotiations tomorrow which is likely to cause the Pound to be volatile this throughout the week. EU Chief negotiator Barnier has said that they want to reach an agreement with the UK and although it will be difficult’ he believes it ‘is possible’.
Chancellor Sunak is reported to be working on an emergency budget statement which will be unveiled in July. UK manufacturing PMI data came out as expected this morning.
The Euro has continued to strengthen with the European Commission proposing a €750 billion recovery fund to help their economies recover from the coronavirus pandemic. In addition, on Friday Eurozone consumer price inflation estimates came out slightly better than expected which initially gave the Euro a boost against the Pound and the Dollar. Italian manufacturing data came out much better than forecasted this morning. Ireland is set to face its worst-ever recession with analysts predicting that their economy could contract between 12.4-17.0% this year.
US consumer sentiment figures were released on Friday afternoon which disappointed the market and led to the Dollar weakening against the Pound and Euro. With economies around the world starting to ease lockdown restrictions, the Dollar has found its safe-haven status under threat which has taken the limelight away from the increased tension between the US and China over heightened security in Hong Kong. President Trump has announced action against China including revoking Hong Kong’s special status, although he did not pull out of the phase one trade agreement. Manufacturing data is due from the US this afternoon, which will provide some short-term volatility.