- Pound (GBP)is under pressure for a second session
- The controversial Internal markets bill was approved by 340 vs 256 votes
- Euro (Eur) boosted by better than expected consumer confidence
- German unemployment and retail sales in focus
The Pound Euro (GBP/EUR) exchange rate is extending losses for a second straight session. The pair settled -0.4% lower on Tuesday at €1.0949, snapping a 4-session winning streak. At 05:15 UTC, GBP/EUR trades -0.05% at €1.0943.
The House of Commons voted through the internal markets bill on Tuesday. The bill passed through the house with a majority of 340 votes compared to 256. The bill, which undermines parts of the EU – UK Brexit Divorce Treaty and which ministers recognise breaks international law will now move to the House of Lords, even as the EU threatens legal action.
At a basic level the bill aims to keep trade flowing smoothly around the UK’s four nations. However, the bill has soured relations with the EU considerably just as time is running out on UK – EU trade talks. If a deal can be agreed with the EU then the bill won’t be needed anyway.
The bill will now move to the House of Lords where it will remain until early December. Boris Johnson doesn’t have a majority there. Revisions to the more contentious clauses are expected.
Looking ahead investors will now turn their attention towards UK GDP final reading for the April – June period. Analysts expect the reading to confirm a 20.4% contraction.
The Euro received a boost in the previous session from stronger than forecast consumer confidence data. Business and consumer morale in the eurozone rose to a better than forecast 91.1. However, this was the smallest increase in 5 months, the latest sign yet that the recovery in the region is losing momentum.
The data showed that sentiment had rebounded the fastest in Germany, whilst Spain was lagging behind.
Concerns are growing that rising covid cases will see lockdown restrictions tightened, dragging further on economic growth.
Attention will now tum to German retail sales and unemployment for further clues over the strength of the recovery in the region.
