The British pound is lower against the euro on Monday.
- US President Trump could fast track AstraZeneca/Oxford vaccine
- US to allow ‘emergency use’ of plasma therapy in treatment of COVID-19
- Pound underperforms after Brexit talks conclude
- Germany Q2 GDP revision out tomorrow (-11.7% exp)
GBP/EUR was lower by 19 pips (-0.17%) to 1.1074 as of 2pm GMT.
The currency pair fell below 1.11 in early trading. It had a second attempt to break higher but failed and turned lower towards lows of the day.
GBP: Sterling suffers Brexit talks hangover
The pound pulled back despite generally risk-on sentiment in markets driven by higher hopes for coronavirus vaccines and treatments and willingness on the behalf of authorities to expedite their use.
There is an element of a Brexit negotiations hangover for Sterling. The British currency slid sharply on Friday after hopes of a new Brexit breakthrough were dashed.
Both chief negotiators on behalf of the EU and the UK admitted progress was scant over the week of talks. Both sides acknowledged that time is running out but neither seems willing to adjust their position. The UK’s David Frost said: “Time is short for both sides” while the EU’s Michel Barnier said “the clock is ticking”.
EUR: Euro rebounds from Friday drop
Specifically, the news that the United States is planning to allow the emergency use of plasma in the treatment of COVID-19 and could fast track the approval of the AstraZeneca / Oxford vaccine lifted market sentiment. AstraZeneca shares rose by 3% on the news.
The euro was seeing some modest recovery after a slump on Friday when as Eurozone PMI data disappointed and contrasted with strong PMIs from the United States. The multi-week rally in the euro is taking a pause as investors look to a possible dovish shift in policy from the Fed at this week’s Jackson Hole symposium.
Tomorrow, the economic calendar livens up with Germany reporting the latest update on Q2 GDP and business sentiment data. The Germany economy is expected to have declined -11.7% in Q2 while the IFO business expectations index is expected have risen in August to 98 from 97.
