The Pound remains weak as the market remains cautious regarding post-Brexit trade negotiations with the EU as it is widely expected that a deal will not be agreed to before Prime Minister Johnson’s deadline of the end of July. The EU has also warned the UK that time is running out whilst the UK camp remain ‘positive’ although negotiations are ‘difficult and quite hard-going’. Under the Benn Act, PM Johnson is required to postpone Brexit if it has not reached an agreement with the EU by Saturday. Rees-Mogg believes that EU legislation could be used to bypass this whilst indicating that there is a ‘pathway to a deal’.
The Euro remains strong due to the EU recovery fund being agreed to by member states with several investment banks calling it a ‘milestone’ for the Euro. ECB President Lagarde believes that the compromise deal of combining grants and repayable loans is reasonable and suggested that ECB economic growth forecasts are currently on track. German consumer climate data was released better than expected at -0.3 compared to -4.6 which was forecasted which has given the Euro some more strength this morning.
California has now overtaken New York as the worst-hit US state with its total number of virus cases rising to over 421,000 cases. Concerns about the economic impacts of the pandemic in the US have been the focus rather than the Dollar’s safe-haven status. However, with the US accusing China of spying and forcing them to close their consulate office in Houston this is suspectable to change. US weekly unemployment claims will be released at 1:30pm which will be closely watched by the market and is likely to cause some short-term volatility.