Despite rising COVID-19 cases in mainland Europe, and increasing fears of a double-dip recession, Tuesday saw the Euro make considerable moves to the upside, gaining significant ground against both the Dollar and the Pound. The Euro was able to reach 1.10 against the pound and close comfortably above the 1.18 mark against the Dollar.
EURUSD started the session yesterday trading at 1.1764, but after an injection of Euro strength, the pair was able to close the day off well supported at 1.1823.
GBPEUR also experienced volatility – opening on Tuesday at 1.0985 and reaching 1.10 during the session, the pair was unable to sustain itself above the handle, closing the day at 1.0952
With the Pound struggling somewhat after a disappointing EU summit last week, developments on Brexit trade negotiations will remain a key driver in Sterling volatility.
It has been reported that UK government officials have noted that they were “hoping to hear more from the EU” before the end of this week. It has also been mentioned that Michel Barnier could come to London on Thursday – but a Brussels source has said that “it is not confirmed”. Barnier has made it public that talks are still in process and hopes progress can be made, confirming yesterday that he “spoke again to David Frost today. My message: we should be making the most out of the little time left. Our doors remain open”. Downing Street also asserted that “Lord Frost and Michel Barnier had a constructive discussion” yesterday, adding “they will remain in contact”.
After a turbulent week last week, cable traded relatively flat on Tuesday, with little price-action throughout the session. GBPUSD opened the day at 1.2942 and closed a fraction above that mark at 1.2950.
On the data front, at 07:00 this morning we had the UK Inflation report released, with the Core headline figure coming in as forecasted at 1.3%, with a previous of 0.9%. Following this we have speeches from the ECB’s Christine Lagarde and Guindos, then BOE member Ramsden, and finally Fed members Brainard and Mester.
