- Pound (GBP) as attention turns to UK retail sales
- Brexit also in focus
- Euro (EUR) looks to EU summit
- EU sees serious obstacles approving €1.8 trillion budget package
The Pound Euro (GBP/EUR) exchange rate is pairing losses from the previous session . The pair settled -0.2% lower on Thursday at €1.1165 just off the low of the day. At 06:15 UTC, GBP/EUR trades +0.1% at €1.1179. The pair is on track to book mild gains of 0.2% across the week, adding to 0.5% gains in the week before.
The Pound came under pressure in the previous session as Brexit nerves intensify. At the EU Summit, EU leaders demanded that the European Commission publishes its own no deal Brexit plan; a move that unnerved investors.
Adding to the jitters, Chief Brexit negotiators suspended direct talks after a member of the EU team tested positive for COVID-19. Officials will continue working in an attempting to clinch a deal as talks are at a critical stage.
Attention will now shift to UK retail sales data for October. Solid consumption helped to drive a strong rebound in retail sales in Q3. The UK has seen 5 months consecutive months of gains since the March April collapse. However, with lockdown restrictions tightening again in October across p arts of the country there is a good chance that retail sales were hit even before the full national lockdown was imposed starting in November. In September retail sales increased 1.5%. However recent data has pointed to a slowdown in October.
The Euro traded mixed versus its major peers in the previous session as attention moves squarely to the EU Summit. Brexit and budget infighting are expected to dominate. The European Council president warned that the EU faces serious obstacles to approving a €1.8 trillion budget package after Poland and Hungary vowed to veto it amid concerns on conditions.
With covid cases surging in the EU and lockdown restrictions tightening the bloc looks set to enter a double dip recession. Whilst the ECB are expected to ease monetary policy in December, additional fiscal support is needed.