GBP/USD: Will Brexit Clash In UK Send Pound Lower vs Dollar?
  • Pound (GBP) trades cautiously higher ahead of Boris Johnson unveiling tighter lockdown restrictions
  • Brexit difference remain ahead of key week
  • Euro (EUR) under pressure, ECB Christine Lagarde expected to reiterate dovish stance
  • German PPI wholesale inflation due in otherwise quiet economic calendar.

The Pound Euro (GBP/EUR) exchange rate is trading mildly higher at the start of the new week. The pair ended the previous week at approximately the same level that it had started the week €1.1030, just 30 points off the high of the week. At 05:15 UTC, GBP/EUR trades +0.08% at €1.1035 in subdued trading.

British Prime Minister, Boris Johnson, is set to unveil new measures to tackle rising covid-19 cases. Northern England has been particularly hard hit by the resurgence in infections, forcing local lockdowns. Liverpool is on the verge of seeing tough measures brought in such as shutting bars, gyms and casino.

With UK covid numbers increasing at an alarming rate, Boris Johnson is under pressure not to revert to national lockdown which would be a disaster for the UK economy. The opposition saying that the government has lost control of the spread of the virus.

Brexit will also be more in focus this week as the 15th October self-imposed deadline to Brexit talks moves into focus.  Boris Johnson has told Germany’s Angela Merkel that the significant gaps must be bridged in the coming days in order for the UK to remain at the negotiating table.

At the same time the British government is urging businesses to prepare for the end of the transition period. The message is that they need to take action whether or not a trade deal is in place.

The Euro is under pressure ahead of a speech from European Central Bank President Christine Lagarde, who is likely to reiterate the central bank’s dovish stance, particularly given that inflation expectation remain so low for the bloc.

There is little else on the Eurozone economic calendar today. Instead the Euro will be driven by sentiment. Investors will also look ahead to tomorrow’s German PPI wholesale inflation figure.