- Pound (GBP) surged on announcement that EU chief negotiator Michel Barnier and his UK counterpart David Frost in London
- Investor will now look ahead to Chancellor Rishi Sunak’s summer statement focus on tax cuts and jobs to boost economy
- Euro (EUR) struggled after European Commission cut growth forecasts, with -8.3% contraction now expected in 2020.
- Pound Euro (GBP/EUR) exchange rate trades comfortably over €1.11
The Pound Euro exchange rate settled +0.7% at €1.1127. The Pair is pushing tentatively higher in early trade on Wednesday +0.1% at €1.1135.
The Pound surged in the previous session following news that Michel Barnier was coming to London to meet with David Frost and inject some momentum into the post Brexit trade talks. The two met for dinner in an informal setting to discuss some of the negotiations most difficult sticking points. These include business competition regulations, which is also known as the level playing field and EU access to UK fishing waters. Rumors are swirling that Mr Barnier is prepared to compromise on fishing, making a deal more achievable.
Today the focus will be firmly on Chancellor Rishi Sunak as he is set to unveil the government’s stimulus plans to help guide the UK economy out of the coronavirus crisis. The centre piece of his min Budget is expected to be a pledge to reduce stamp duty to boost the housing market. The Pound will be particularly focused on how the Chancellor intended to tackle the jobs crisis. The Chancellor is also under pressure to announce a fresh wave of financial support for British businesses.
The Euro was under pressure in the previous session after disappointing German industrial production data. German industrial production came in weaker than expected, rising 7.8% in May, less than the 10% forecast. The jump came following a -17.5% decline in April.
The European Commission also dampened the mood for the Euro cutting economic forecasts. The region is now expected to contract by -8.3% this year, followed by a 5.8% rise in 2021. Just in May the Commission estimated a -7.4% contraction with a rebound of 6.1%. `
Today there is no high impacting Eurozone data. Looking to wards the second half of the week, the Eurogroup meeting and German trade data will be in focus.