The market awaits EU-UK meeting outcome

Hi everyone,

Boris Johnson is due to meet 3 senior EU officials this afternoon to discuss the future trade talks between the EU-UK. Whilst this is sure to be a 'just for show' meeting, the market will nevertheless want to digest what has been said. The PM is expected to say he wants a deal struck by Autumn and there are 5 meetings planned between now and the end of July.

The talks come just 4-days before the EU Council meet to debate Brexit, the coronavirus recovery fund and long-term budget. Last month, the council meeting was deemed a 'danger point' for the Pound if an extension was not agreed. However, it seems analysts were wrong to predict a sensitive £ at this time, as the no-extension result has had no impact on rates.

Halfway through the month and Sterling's performance has followed that of the global stock market. When stocks have risen, so has the Pound. Last week saw some attractive prices with £-€ hitting 1.1270 mid-market & £-$ at 1.28 mid-market. However, the Pound has since retracted nearly 1% & 3% respectively due to the recent rally getting ahead of itself and a potential second wave of Covid-19. 

 

Looking ahead for the week and it's one of the busiest schedules in memory for economic data. The standout will be Thursdays BoE interest rate decision, that many are expecting another record rate cut and into negative territory for the first time. If this happens, the Pound will undoubtedly fall across the board. 

 
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