Chancellor Sunak has reiterated that the possibility of an immediate economic bounce back once lockdown restrictions end are very slim and will take time. This morning, UK consumer price inflation data came out worse than expected at 0.8% which is its lowest level since August 2016. After taking back some of its recent losses on Monday, this data coupled with Sunak’s comments led to a slowdown in momentum for Sterling which has since weakened.

Bank of England Governor Bailey is due to speak today at 2:30pm, with the market closely watching for any comments regarding the economic impact of the pandemic and thoughts on if negative interest rates are a possibility.

Eurozone and German ZEW economic sentiment figures both were released better than expected which helped the Euro hold on to its recent gains against the Dollar. Italian PM Conte will write to European Commission President von der Leyen requesting more financial help in the next fiscal package. Several EU countries will make a counter-proposal to the €500 billion fund that was jointly suggested by Germany and France. Eurozone consumer price inflation is also due to be released at 10am this morning.

US Treasury Secretary Mnuchin believes that there may be a possibility of ‘permanent’ damage to the US economy if lockdown restrictions continue, although he expects the economy to perform better in the latter half of the year. Federal Reserve Chairman Powell offered a more cautious tone suggesting that a full economic recovery may not occur until a vaccine is developed with the economy potentially shrinking by 20-30% and the unemployment rate possibly increasing to 25%. This has kept the Dollar from making any further gains against the Pound and Euro. FOMC meeting minutes from the last meeting will be released this evening which may cause some short term volatility.