- Pound (GBP) advances cautiously but Brexit, coronavirus and negative rate concerns linger
- Investors await Chancellor Rishi Sunak’s attempt to battle the coronavirus crisis
- Euro (EUR) looks to German industrial production after mixed bag of data on Monday
- The Pound Euro exchange rate settled on Monday -0.5% at €1.1047. At 05:15 UTC, GBP/EUR trades +0.1% at €1.1056
Concerns that the Bank of England were taking steps to prepare for the unprecedented move towards negative interest rates dragged on the Pound in the previous session. The fears overshadowed the UK construction sector unexpectedly bouncing back into expansion.
Brexit talks are in focus again after last weeks’ talks ended early. Brexit negotiators will give another attempt to put together a post Brexit trade deal. Whilst there are still significant differences between the two sides, there is also some optimism after an Irish diplomat signalled that a deal is anticipated before October.
Coronavirus concerns remain after a few flare up in cases across the UK after Super Saturday. The UK government has also decided to stop publishing routine data.
Looking ahead investors will focus on Rishi Sunak, who tomorrow will outline a major relief package in an attempt to help the economy through the coronavirus crisis. There have been some rumours that a VAT cut could be on the cards. Changes to the furlough scheme will be closely eyed.
The Euro was in favour across the previous session despite a mixed bag of data. German factory orders and Eurozone sentiment data underwhelmed, whilst Eurozone retail sales impressed.
After a decline of -10.6% and -12.1% in March and April respectively, retail sales increased by a whopping 17.8% in May. Whilst this does not full recoup the losses of the previous months, it certainly comes much closer than most market participants had predicted.
The data comes following mixed data about the progress and pace of the recovery in the region. However, these retail sales numbers certainly support the theory that a V shaped recovery is still a possibility.
Looking ahead investors will focus on German industrial production data today. Analysts’ are expecting production to have rebounded firmly jumping +10% month on month in May, well up from -17.9% decline in April.
