GBP/EUR opened this morning at the highest point since the UK first decided to leave the EU back in 2016. The Pound picked up towards the back end of last week following the Prime Minister’s cabinet reshuffle and more importantly the resignation and replacement of Sajid Javid.
There could be scope for further Sterling growth if positive UK data prevails this week. Inflation, retail sales and PMI figures are set to be released with all expected to be higher than previously.
David Frost, Chief Brexit Negotiator, is expected to meet with EU officials in Brussels later today to map out a Canada style trade deal, which the UK is happy to agree with, but to rule out any form of regulatory alignment with the EU from 2021 onwards.
The weak Euro is proving extremely hard to ignore as EUR/USD slumped to fresh lows on Friday which haven’t been seen since April 2017. Concerns over economic growth in the Eurozone continue to haunt investors, particularly given the forecasted figures for the Euro PMI data to be released on Friday and of course the continued anxiety of the coronavirus outbreak.
Furthermore, Germany’s political stability took a hit after the leader of the Centre-right CDU party, Annegret Kramp-Karrenbauer, stepped down sparking a negative-Euro reaction last week.
A quiet day is expected for the Dollar as US banks shut for President’s Day. The main event to keep an eye out this week include the US Federal Reserve’s (Fed) meeting minutes, which could provide some insight into future monetary policy decisions. Flash PMI’s are also out on Friday afternoon, although not expected to move the Dollar too much before we head to the G-20 summit next weekend.