- Pound (GBP) under pressure after PM Boris Johnson tells UK to prepare for no deal Brexit
- Full national lockdown could be the only way to bring covid cases back under control
- Euro (EUR) broadly under pressure as covid cases surge & lockdown measures tighten
- ECB policy makers to speak including President Christine Lagarde
After booking mild losses in the previous session, the Pound Euro (GBP/EUR) exchange rate is clawing higher at the start of the new week. The pair shed -0.1% last week, settling at €1.1018, towards the lower end of the weekly trading range. At 05:15 UTC, GBP/EUR trades +0.15% at €1.1041.
Whilst on Friday Prime Minister Boris Johnson told the UK to prepare for a no deal Brexit, Brexit talks are still set to continue this week. The two sides will atttempt to inject life into the post Brexit trade talks which looked finished last week, as each side blamed the other for lack of progress.
The British government said that the door is still ajar for a post Brexit trade deal but the EU must change their approach and reveal a more serious side in talks this week. Meanwhile, the EU said that the UK must make concessions for a deal to be achieved. Clearly the is still large difference between the two sides, with time running out.
Rising covid cases and tighter lockdown restrictions could also cap gains for sterling. 16,982 new coronavirus cases were recorded over the last 24 hours, as many parts of the UK including London saw tighter lockdown measures kick in over the weekend. A government scientific adviser Jeremy Farrar warned that current regional lockdown measures would not be enough to stem the spread of the virus.
The Euro has been under pressure over recent weeks as coronavirus cases on the old continent continue to rise. France recorded over 30,000 new cases in just 1 day. Italy is just the latest to unveil new covid restrictions giving mayors the power to shut public squares and to halt public gatherings in a bit to bring surging coronavirus cases under control.
Euro investors fear that tighter lockdown measures being brought in across Europe could slow the economic recovery even further or even put it into reverse.
There is no high impacting Eurozone data due. However speeches from several ECB policy makers and by ECB President Christine Lagarde could also drive the common currency.