- Pound (GBP) rises despite questions over 21st June Freedom Day
- Brexit talks could cap gains
- Euro (EUR) has traded lower on USD strength last week
- ECB rate decision on Thursday
The Pound Euro (GBP/EUR) exchange rate is holding steady at the start of the new week. The pair closed on Friday at €1.1631, approximately the same level that it had started the week at, after clawing back losses in the second part of the week. At 05:45 UTC, GBP/EUR trades flat at €1.1631.
The Pound is trading cautiously on Monday amid ongoing uncertainty over whether England’s lockdown will end on 21st June as initially planned. Matt Hancock the British Health Minister said it was still too soon to say given the steep rise in cases from the Indian variant of covid over the last month.
There has been a renewed rise in covid cases. However, so far hospitalisations have remained flat, thanks to the vaccine which is encouraging.
Brexit talks could keep the lid on any pound gains. Both sides prepare for talks this week on a part of the Brexit deal that governs trade with Northern Ireland. Since the UK’s departure from the EU relations have deteriorated with both sides accusing the other of acting in bad faith over the Northern Ireland protocol.
There is no high impacting UK economic data due to be released today.
The Euro came under pressure in the second part of last week as the US Dollar strengthened. The Euro and the US Dollar have a negative correlation.
Weaker than forecast Eurozone retail sales also pulled on the common currency. Retail sales in the region declined by -3.1% in April, in part due to the stricter lockdown restrictions in some countries. Retail sales had climbed 3.3% in March. Whilst the number was pretty grim it is also expected to be a low as lockdown restrictions ease again.
This week attention will be firmly on the European Central Bank rate decision due on Thursday. ECB Governor Christine Lagarde will almost certainly be pressed hard on when tapering of ECB support could begin but she will almost certainly give nothing away.
Today German factory orders could offer a catalyst to an otherwise quiet start to the week.