- Pound (GBP) supported by impressive UK retail sales
- Brexit deal with EU could see 60% of UK trade objectives achieved
- Euro (EUR) holds steady even as Spain is removed from safe list of countries in peak travel period
- German IFO business sentiment data expected to show signs of improvement
The Pound Euro exchange rate (GBP/EUR) is treading water at the start of the week after -0.2% losses from the previous week. The pair settled on Friday at €1.0976. At 05:15 UTC, GBP/EUR trades flat at €1.0975.
The Pound has been broadly supported by UK vaccine hopes and rebounding retail sales over the past week. On Friday data revealed that overall UK retail sales have returned to a similar level to before the coronavirus pandemic after two straight months of increases. In June retail sales jumped 13.9% compared to the previous month, adding to 12% increase in May.
Brexit has dragged on demand for the Pound as recent talks have failed to see much progress. That said, UK Brexit Secretary David Frost has reportedly informed Tory MP’s that the UK will win around 60% of its objectives in an EU trade deal. The private assurance comes after both negotiators, David Frost and Michel Barnier poured cold water on a Brexit trade deal at the end of last week’s talks.
Concerns over a second wave of coronavirus infections in Spain is being shrugged off by the Euro on Monday. The number of daily cases has spiked in the Iberian peninsula. Spain is scrambling to stay ahead of the outbreak that prompted the UK to re-impose quarantine on travellers returning from the country. This deals a fresh blow to Spain which suffered severely in the first wave of coronavirus infections and whose economy is heavily dependent on tourism.
The UK, along with Norway and France have announced quarantine measures and travel warnings for those traveling to and from Spain and particularly the Catalunya region. This will almost certainly affect future bookings in the peak travel period for Spain whose tourism industry accounts for 10% of GDP.
Data wise German IFO business sentiment index is expected to continue showing signs of improvement which could support the Euro.