- Pound (GBP) advances amid improved tone in Brexit talks
- Brexit headlines suggest the tone is improving
- Euro (EUR) struggles after weaker data
- ECB Christine Lagarde to speak
The Pound Euro (GBP/EUR) exchange rate is pushing higher at the start of the week adding to last week’s gains . The pair gained 0.4% across the previous week closing on Friday at €1.1710 after recovering from a low of €1.1640. At 05:45 UTC, GBP/EUR trades +0.1% at €1.1723.
The Pound managed to gain back lost ground in the second part of last week amid a change in tone in EU -UK Brexit talks. Tensions had been rising between the two sides with threats from the British government that they would trigger article 16 of the Brexit deal to halt co-operation with the EU over Northern Ireland. However, the latest headlines suggested the two sides are still committed to finding a solution to the Northern Ireland border issue.
This week is a busy week as far as data is concerned. Whilst there is nothing of note on the UK economic calendar today, unemployment data, inflation numbers and retail sales figures are due on Tuesday, Wednesday and Friday respectively. The data will be more in focus than usual after the Bank of England voted to not raise interest rates in the November meeting but hinted that they could hike rates in December.
Separately the Euro struggled to move higher on Friday after Eurozone industrial production contracted for a second consecutive month in September. Output fell -0.2% month on month, better than the -0.5% decline forecast and a significant improvement from August’s-1.7% decline.
The migrant crisis growing at the Belarus border with the EU has led to expectations that the EU will apply fresh sanctions against Belarus. The Belarus leader Alexander Lukashenko threatened to cut the gas supply if sanctions are applied. This threat comes at a time when Europe is experiencing an energy crisis.
This week the Eurozone economic calendar is quiet, although European Central Bank Governor Christine Lagarde is due to speak several times across the week. Given the growing divergence between the ECB’s monetary policy and that of the BoE or the Fed investors will be paying particular attention to what Christine Lagarde has to say.