The Pound has continued to strengthen against both the Euro and the Dollar as a spokesman for Prime Minister Johnson said that the government believes that a free-trade agreement can be reached with the EU. From Monday onwards, the UK is set to introduce a quarantine exemption list for as many as 75 countries in order to help stimulate the travel industry. PM Johnson has also suggested that China’s new Hong Kong security law is a breach of the Sino British Joint Declaration and has announced that the UK will offer a path to citizenship for 3 million people in Hong Kong which is likely to increase tensions between the UK and China.
The Euro has managed to hold its ground against the Dollar after the release of better than expected manufacturing PMI figures yesterday morning. The unemployment rate for the Eurozone will be released at 10am which may cause some short-term volatility. Dutch PM Rutte has suggested that a compromise over the proposed EU recovery fund is possible but is likely to take some time. ECB chief economist Lane has said that the EU’s recovery is likely to experience a ‘two steps forward, one step back’ approach and that investor confidence has been knocked by reports of coronavirus cases increasing following lockdown restrictions easing.
The Dollar remains largely unchanged against the Euro after ISM manufacturing PMI data also beat expectations coming out at 52.6 compared to 49.5 that was forecasted. At 1:30pm today the US unemployment rate and average hourly earnings will be released and will be closely watched by the market to see how the coronavirus pandemic has continued to impact the US labour market. Non-farm payrolls will also be released a day early due to a US bank holiday tomorrow. The US House of Representatives has approved sanctions that would fine banks for doing business with Chinese officials after China imposed a new security law in Hong Kong giving it further power in the region.