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The British pound is down against the euro on Thursday.

  • Barnier on trade deal: “We are still far away”
  • Frost on post-Brexit: “Substantial areas of disagreement”
  • Rise in US initial jobless claims dampens investor sentiment
  • Rise in Eurozone Consumer confidence tails off

GBP/EUR was lower by 29 pips (-0.25%) to 1.10974 as of 3pm GMT.

The currency pair wasn’t able to hold onto 1.10 and slid around 30 pips before consolidating between breakeven levels and lows of the day.

GBP: Lack of post-Brexit progress hits pound

After what felt like more optimism toward Brexit talks in recent weeks, the mood seems to have turned a little more solemn. The UK and EU chief negotiators were both out commenting on the progress of negotiations today. There was a common message that both sides remain far apart on some key issues. With a deal still not in sight, it is the British pound that tends to suffer in foreign exchange markets and not the euro.

The EU’s Michel Barnier has said “we are still far away in negotiations with the UK” adding that there was no progress on a level playing field or fisheries.

From a UK perspective a senior UK official on Brexit said they expect talks to continue in the second half of August and into September and that there is no formal cut off date for talks and summarising by saying “we are equally close to breakthrough and breakdown in negotiations.”

EUR: Euro holds up as US jobless claims snap streak

The euro was overall losing some momentum driven by this week’s agreement on an EU Recovery fund. EUR/USD has stalled near 1.16.

Still, as broader sentiment soured and European stock markets ended mixed, the pound suffered more than the euro. A contributor to the weaker sentiment was US weekly unemployment stats. Initial US jobless claims rose by 1,416,000 versus the 1,300,000 estimated. It ended a streak of 15 consecutive weeks of declining initial claims, raising alarms that the labour market recovery has stalled.

On the economic data front, EU consumer confidence data for July 2020 unexpectedly fell to -15.0 from the -14.7 in June when -12.0 had been estimated. The index bottomed in April at -22.0.