Reuters have cited unnamed sources with knowledge of the on-going trade negotiations with the EU who have suggested that ‘we are at an impasse’ and the differences in the main goals that both UK and EU are trying to achieve are ‘enormous’. This has led to the Pound losing some ground against the Euro.

The UK government has announced five tests that they will need to meet in order to start easing lockdown restrictions, with social distancing measures being reviewed on 7th May. The UK’s death toll rose by 586 yesterday compared to 300 the previous day which suggests that a cautious approach is to be expected.

The Euro has struggled to make any major gains against the Dollar as rating agency Fitch downgraded Italy’s economic outlook to BBB- as they believe that the recession caused by the coronavirus pandemic will deterioration of Italy’s budget balance and they predict that their economy will contract by 8% in 2020. In response, the Italian economy minister has suggested that their economic fundamentals are solid. Spain has announced a four-step plan to ease lockdown restrictions which will be fully complete by the end of June at the very earliest.

US consumer confidence data came out worse than expected at 86.9 compared to 88.3. US advanced GDP will be released at 1:30pm, which will closely be watched by the market and could cause some volatility for the greenback. The FOMC interest rate decision is due at 7pm this evening, with analysts predicting that they will keep interest rates unchanged. Comments from the Federal Reserve Chairman Powell as well as other FOMC members regarding the future interest rate path will be closely scrutinized. Overall, the Dollar remains extremely volatile.