The EU has warned the UK that they have less than 2 weeks to save post-Brexit trade negotiations. EU chief negotiator Barnier has reportedly said that trade talks will not progress unless there is an explanation over what the UK’s future policy on industrial subsidies would be. In response, the UK’s negotiator Frost has refused to abide by this short-time frame ‘dictated’ by the EU. Both parties will hold emergency talks next week in an effort to salvage a deal. Nonetheless, the Pound remains strong across the board. Bank of England Governor Bailey will be making a speech at around 2pm which will be closely watched.
This morning, preliminary French consumer price inflation came out better than expected at -0.1% compared to the forecast figure of -0.2%. The number of new coronavirus cases in Germany has increased to 1,571 meaning that the total number of active cases has crossed the 17,000 mark for the first time since 10th May. This is keeping the Euro on the back foot against the Pound, although the common currency has made gains against a weaker Dollar.
Yesterday during the Jackson Hole Symposium, the Federal Reserve indicated a change in its approach when managing inflation. The central bank will target an average of 2% inflation rather than having that level as a fixed target, meaning that they will be able to keep interest rates at its current low levels for longer in order to stimulate economic growth in the US. This has in turn kept the Dollar weak against the Pound and Euro. US consumer sentiment and inflation expectation figures will be released at 3pm which may cause some short-term volatility.