The Pound has continued to weaken after Prime Minister Johnson mentioned that he would end negotiations with the EU by mid-October if there isn’t a deal in place by then. This led the market to start pricing in a potential interest rate cut by the Bank of England into the negative territory. France has said that a deal remains ‘unattainable’ if the UK opposes a ‘level playing field’ in trade. Overall, the market remains wary of any pessimistic Brexit headlines that will no doubt create a volatile Pound.
Both Germany and France have seen a rise in exports recently which has led the market to believe the impact of the pandemic on Eurozone economies has been less than anticipated. This in turn has kept the Euro strong in general, although it has lost ground against a stronger Dollar. The market awaits tomorrow’s European Central Bank statement regarding their monetary policy stance before deciding the next direction of the common currency.
The Dollar strengthened against both the Pound and Euro due to its safe-haven status as AstraZeneca announce a delay in testing for their coronavirus vaccine. However, Democrats and Republicans are still far apart on a potential fiscal stimulus deal a relief package worth over $1 trillion was called ‘meager and an ‘insult’. In addition, the market is concerned that the presidential elections in November will yield an inconclusive result which is keeping the Dollar from making significant gains for the time being.