The Pound has weakened as investors remain less optimistic about what the recently introduced three-tier system will have on the UK economy. The UK and EU have made progress with regards to competition and state aid rules but fishing still remains a stumbling block. Post-Brexit trade negotiations have been extended until Wednesday. There are rumours that Prime Minister Johnson could wait until the result of the US presidential elections as he is more inclined to go for a no-deal Brexit if President Trump is re-elected. Any further comments from either party will have an impact on the Pound going forward.
France, Belgium and the Netherlands have all reported large increases in the number of new coronavirus cases over the weekend. In addition, Spain has declared a new state of emergency that will likely run until May 2021 whilst Italy is also preparing to reintroduce further lockdown measures. As a result, the Euro has been susceptible to weakness and the rise of cases across Europe has benefitted the Dollar due to its safe-haven status. German Ifo business climate data is due at 10am.
The Dollar has continued to strengthen as investors remain optimistic over the much anticipated fiscal stimulus package that is being negotiated between the Republicans and Democrats. However, the greenback has had some bouts of weakness. This is due to the US giving full approval for the antiviral drug remdesivir to be used to treat coronavirus patients but also because most presidential election polls are showing a Democrat win. The Dollar is likely to remain volatile in the run-up to the 3rd November elections.