- Pound (GBP) is dropping lower as another round of Brexit talks begin this week
- There is little hope of the current deadlock being overcome, PM sets 15th October deadline
- Euro is attempting a rebound after ECB concerns over Euro strength dragged on the common currency last week
- German industrial production data & Eurozone Investor confidence in focus
After trading flat across the previous week, the Pound Euro exchange rate (GBP/EUR) is kicking the new week off on the back foot. The pair settled on Friday at €1.1217. At 05:15 GBP/EUR trades -0.3% at €1.1182. This is at the low of the daily traded range.
The 8th round of Brexit talks are due to begin this week, after very little, if any progress was made in the previous round. Reports that the UK is planning new legislation which overrides part of the Brexit withdrawal agreement is expected to infuriate the EU dragging further on the chances of a trade deal.
Talks have so far stalled on Britain’s insistence of full autonomy over state aid and and fishing. The EU Chief negotiator has accused the UK of wanting all the benefits of remaining in the EU without the obligations.
Adding to the downward pressure, Prime Minister has set the date of 15th October by which a trade deal must be agreed. If no deal is agreed the UK will leave the transition period at the end of the year on unfavourable World Trade Organisation terms. This could coincide with a second wave of coronavirus resulting is a serious shock to the UK economy.
The Euro moved broadly lower versus major peers last week. The common currency was out of favour after the European Central Bank hinted at concerns over the strength of the common currency. Macro data showing that the economic recovery in the bloc could slowing also dragged on demand for the Euro.
Today investors will look ahead to German industrial production data and Eurozone Sentix Investor Confidence Data which will offer fresh clues over the health of the recovery.
Looking ahead the focus this week will be on the European Central Bank decision on Thursday. The bank is not expected t adjust policy.