- Pound (GBP) extends Brexit inspired losses as no deal fears escalate
- UK daily covid cases rise to almost 3000, a number last seen mid lockdown
- Euro (EUR) trades broadly lower amid concerns over economic recovery in Germany
- Eurozone GDP data expected to confirm -12.2% QoQ contraction
The Pound Euro exchange rate (GBP/EUR) is heading lower for a third consecutive day. The pair settled lower in the previous session, -0.45% at €1.1144, off the 10 day low of €1.1119 hit earlier on the session. At 06:15 UTC, GBP/EUR trades -0.1% at €1.1126.
No trade deal Brexit fears sent the Pound spiralling lower in the previous session and continue to drag on demand for sterling today. Not only is there a new trade deal deadline in just 38 days, Boris Johnson is also planning legislation to override parts the Brexit divorce treaty.
The European Union responded by warning that there would be no trade deal if the UK attempted to tinker with the divorce treaty. The strong words from both sides show just strained relations between have become. Brexit talks are to taking place this week. Boris Johnson will be hoping that the shorter deadline will add pressure to the negotiations to get a deal done.
Rising covid cases in the UK are rising. Just shy of 3000 new daily coronavirus cases were recorded in the UK on Monday. This is the highest level since mid-May in the height of lockdown. As cases rises, fears of more local lockdowns could hurt demand for the Pound
In the absence of any high impacting data, attention will now turn towards the inflation hearing later today.
The Euro was under pressure versus its major peers in the previous session, albeit traded higher versus the Pound. Weaker than expected German industrial production overshadowed better than forecast Eurozone investor sentiment.
German industrial output increased 1.2%, which was well short of the 4.7%. This was also down significantly from the 9.7% increase in June. Whilst the powerhouse of Europe is stll seeing growth as it rebounds from the coronavirus crisis, the rate of that growth has slowed, which is unnerving investors.
Today the focus will remain on the economic calendar with the release of German trade data and the second estimate of the bloc’s second quarter GDP reading.