Sterling falls to six-week low
Sterling reached a six-week low yesterday before a slight recovery in the afternoon session as Britain unveiled draft legislation for post-Brexit life, increasing concerns that trade talks with the European Union could be derailed.
The legislation – named the Internal Market Bill – acknowledged it had inconsistencies with international law and prompted a negative response from the EU and their leaders. It also raised the possibility of Britain exiting the EU single market in four months with no replacement trade agreement in place.
This comes as EU chief negotiator Michel Barnier arrived in London for the fresh round of talks, with some rumours circulating that Prime Minister Boris Johnson might be trying to goad the bloc into storming out of negotiations. But after EU representatives stated the bloc would not seek a suspension of talks, the pound recovered some its lost ground.
The euro held onto its gains against the dollar yesterday as the market braces for a European Central Bank meeting to gauge policymakers’ views on the common currency’s recent appreciation and its impact on inflation. While investors expect the ECB to keep policy steady, investors will closely watch President Christine Lagarde’s comments on how the euro’s rise to a two-year high this month affects the outlook for inflation and economic growth.
11:45 – ECB interest rate decision
12:30 – ECB policy statement and press conference
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