- Pound (GBP) picks up from 6 month lows, Brexit talks on a knife’s edge
- Internal markets bill to be debated in Commons
- Euro looks to industrial production data 10% growth exp.
- ECB not troubled by appreciating Euro
After taking 3.7% across the previous week, in its worst weekly performance since early March, the Pound Euro (GBP/EUR) exchange rate is rebounding at the start of the new week. The pair settled on Friday at €1.0798, marginally up from the 6-month low of €1.0762 reached earlier in the session.
At 05:15 UTC, GBP/EUR trades +0.2% at €1.0819, towards the upper end of the daily traded range.
The Pound sold off sharply across the previous week amid the deteriorating Brexit crisis. The presentation of plans by the UK government to undermine parts of the EU Brexit Treaty provoked a strong reaction from the EU and sent the Pound tumbling. The risks of trade talks collapsing rose considerably as the EU and the UK play brinkmanship.
The EU has given the UK until the end of the month to remove the Internal Markets Bill, the centre of the problems, or face possible sanctions.
Today the bill will be debated in Parliament, whilst formal talks with the EU will resume, which could create some volatility.
Looking ahead, this week is a busy week for the Pound with the release of employment data, retail sales and the Bank of England monetary policy announcement in Thursday.
The number of coronavirus cases is on the rise, prompting the government to announce new social distancing restrictions. Meetings of people is now limited to 6, down from 30.
This week is expected to be a relatively quiet week for Eurozone data. Today investors will look ahead to the release of industrial production data for further clues over the economic recovery after manufacturing PMI outperformed the service sector. Analysts are forecasting +10% growth month on month in July, up from 9.1% in June. This would confirm a sold economic rebound in the sector.
Lat week, the European Central Bank voted to keep interest rates on hold and didn’t appear that bothered by the recent appreciation of the Euro. The central bank will continue to monitor the value of the Euro.