- Pound (GBP) tentatively higher as post Brexit trade talks start
- UK GDP on Tuesday, will be a key focus on economic calendar this week
- Euro Supported by ECB, economic sentiment data under the spotlight
- Pound Euro exchange rate (GBP/EUR) heading for 1% loss this month
The Pound Euro exchange rate shed -0.5% across the previous week, the third straight week of losses. The pair is on track to lose over 1% across the month of June, adding to the -3.2% lost in May.
At 05:15 UTC, GBP/EUR trades +0.1% at €1.10, the key psychological level and up from the 3-month low struck on Friday, as all eyes turn to Brexit.
The EU and the UK resume post Brexit trade talks on Monday, the first round of talks since UK Prime Minister and EU leaders had a positive sounding video conference, which is expected to have injected fresh political momentum into the talks.
Should both sides leak details surrounding disagreements, ten the Pound could come under pressure. Meanwhile silence from both camps could provide some solace to Sterling investors. EU Chief Negotiator Michel Barnie is due to give an update at the end of the week.
Data wise, UK GDP reading on Tuesday is the highlight on the economic calendar. Analysts are expecting the reading to confirm a -2% contraction in the first three months of the year. This is likely to be a very moderate contraction compared to what is expected in the second quarter of the year.
Coronavirus statistics will also be important with the number of daily deaths falling, but at a frustratingly slow rate.
The Euro remained well supported in the previous week after encouraging PMI data and after the European Central Bank revealed in the minutes to the latest monetary policy meeting that it was prepared to take further action if necessary.
Broadly speaking, the region’s handling of the coronavirus crisis in addition of tentative signs of recovery in some economies is underpinning the common currency.
Today, investors will look ahead to the release of Eurozone economic sentiment data. Analysts are expecting a sharp tick higher to 80 from 67.5. A strong reading could boost optimism surrounding a speedy economic recovery.