The British pound is up against the euro on Tuesday.
- Sunak to announce new UK spending plans Wednesday
- European Commission lowers EU economic forecast
- Frost and Barnier have dinner before new Brexit talks
- Germany May industrial production disappointed
GBP/EUR was higher by 98 pips (+0.87%) at 1.1140 as of 3pm GMT. The pound-euro exchange rate is higher by +0.36% this week.
The currency pair found a base early on at 1.105 and went on to push up to 1.115 in a 100-pip rally. Yesterday it had fallen -0.47%.
GBP: High hopes for Sunak mini budget
High hopes for the new spending plans to be announced by UK Chancellor Rishi Sunak tomorrow helped traders push up the value of the pound on Tuesday. The gains erased Monday’s drop in pound in its exchange rate with the euro and took it positive for the week.
In the so-called ‘mini budget’ tomorrow, ways that Rishi Sunak could gratify markets include bold new spending plans or tax cuts, while a focus on preserving jobs would probably disappoint.
Perhaps adding a little to a better sense about post-Brexit EU / UK trade talks is the UK’s Frost and EU’s Barnier are set to have dinner today to kick off latest Brexit talks.
EUR: European Commission lowers forecasts
The European Commission released new forecasts for the European Union on Tuesday. It expects that the Euro area economy probably shrunk by 13.5% in Q2 and that an ‘uneven’ recovery across member states will create a deeper slump than previously thought.
Ultimately the weaker forecasts could be a boon for the euro if they help muster some more determination from politicians to agree on an EU Recovery Fund.
The data backed up the lower forecast on Tuesday as German industrial production for May rose +7.8% month-over-month, weaker than the +11.1% expected by economists.
Some positive news for Europe regarding its progress on the pandemic is that Germany’s region of Saxony is to allow big events of more than 1000 people from September 1st.
