Even though UK retail sales data came out better than expected on Friday morning, the Pound continued to weaken against both the Euro and the Dollar. Instead, the market chose to focus on the Bank of England’s decision to increase its quantitative easing measures by £100bn which led to a more bearish Pound.
CBI industrial order expectations are due at 11am which may cause some short-term volatility. Bank of England Governor Bailey has suggested that the central bank will only raise interest rates again once the UK has reduced its balance sheet caused by increase spending to combat the economic effects of the pandemic.
With the German economy reopening, the number of coronavirus cases has started to rise as there were 537 new cases reported. German Bundesbank President Weidmann believes that the country has seen the worst economic impacts already and hopes for a gradual recovery. European Commission President von der Leyen hopes that member states can agree to its proposed stimulus package by August before the European summer shutdown. Eurozone consumer confidence will be released this afternoon at 3pm which will be closely watched by the market.
Renewed fears of a second wave of coronavirus cases has given the Dollar strength due to its safe-haven status. Trade advisor Navarro has said that US businesses are stockpiling in anticipation of a second wave of the coronavirus. Federal Reserve Chairman Powell has reiterated that the pandemic has caused economic uncertainty but over time it will recover. FOMC member Rosengren believes that additional fiscal and monetary support is needed to support the economy further and predicts the unemployment rate in the US to be over 10% at the end of this year.