The Pound remains strong as the market chose to focus on rumours that the UK would be willing to compromise on certain issues during post-Brexit trade negotiations with the EU. EU Chief Negotiator Barnier has written to MPs to say that they would be willing to accept an extension to the transition period of up to 2 years. ¬UK final services PMI beat expectations this morning, which has given further support to the Pound.
The Euro has made further gains against a weaker Dollar but struggled against the Pound. Talks over another German fiscal stimulus package concluded without an agreement yesterday and will continue today. Eurozone final services PMI came out better than expected which has given the Euro a boost. Tomorrow’s ECB meeting is still the focus for the Euro with the central bank expected to increase their level of quantitative easing.
The Dollar has continued to lose ground against both the Pound and the Euro with protests continuing in the US although President Trump has toned down his threats of imposing martial law. A flurry of US economic data is due this afternoon including PMI’s for the non-manufacturing and services sectors respectively, as well as factory orders and employment figures. With coronavirus cases in the US decreasing, the Dollar is losing out as investors take a more risk-on approach.