Yesterday, the Pound strengthened against both the Euro and the Dollar. Although the Pound has continued to perform well against a weaker Dollar, it lost ground against the Euro overnight. The UK government has reportedly abandoned hopes of a UK-US trade deal being agreed before the US presidential election in November although the next round of trade negotiations will begin on Monday via video conference. The Telegraph has reported that UK ministers think that a deal with the EU will not happen with the government working on the assumption that WTO terms will be used at the end of the transition period although this is yet to be confirmed.
The market’s reaction to EU members agreeing to a recovery fund worth €750 billion was initially quite muted, although the Euro has gradually made gains against a weaker Dollar over the last 24 hours. German economy minister Altmaier believes that the compromise deal will increase the chances of seeing an economic recovery in the Eurozone in the second half of 2020. He also expects all European countries to return to growth in 2021.
The Dollar has weakened as President Trump has conceded that the pandemic in the US will ‘get worse before it gets better’. US Treasury Secretary Mnuchin expects the next coronavirus stimulus bill to be passed by the end of July although both the Republicans and Democrats have suggested two different amounts. The number of new coronavirus cases in California, Arizona and Mississippi has continued to increase with the number of cases overall in the US jumping by nearly 58,000 since yesterday.