Boris Johnson and European Commissioner Ursula von der Leyen agreed on Saturday to intensify Brexit talks to close “significant gaps” raising the expectation of a deal. UK-EU trade talks are continuing in Brussels this week with Prime Minister Johnson stating both sides should “move on” if a deal is not reached by mid-October.
EU Chief Negotiator Michel Barnier will travel to Berlin and then London to try and progress negotiations. GBP value has been sensitive to Brexit related headlines which are likely to continue throughout the week. Analysts at Goldman Sachs see value in buying the GBP vs EUR in anticipation of the EU and UK striking a Brexit trade deal in the coming weeks stating, “Go long vs Euro as Brexit deal nears”.
Fishing rights is a sticking point in these negotiations, with Barnier set to hold talks with the ministers of the main key fishing states, the biggest being France. The UK’s desire is to take back full control of fishing waters and increase the share of fishing stocks. France on the other hand is pushing for the current status quo of full access to British waters following Brexit.
French President Emmanuel Macron is said to play a pivotal role in negotiations with other EU countries worried the hard-line French stance could damage a wider deal with the UK.
Eurostat announced last Friday that the eurozone economy shrank by 12.1% in the second quarter of 2020 compared to the first quarter. This is the biggest drop on record. Meanwhile the Gross Domestic Product figures for the European Union is projected to have fallen by 11.9% according to estimates by the bloc’s official statistics agency. The Spanish economy has been hit the hardest, contracting by 18.5% with Portugal closely behind at 14.1%.
The EU Commission warned earlier in the year the bloc is expected to go through a “recession of historic proportions” during 2020 which they confirmed again in a statement earlier this month.
€600bn in fiscal stimulus has been added by the European Central Bank to boost its emergency support programme to a total of €1.35 trillion.
Governments around the world have been making similar moves including the US Federal Reserve, Bank of England, Bank of Japan and other central banks around the globe.
If your currency requirements include the euro, keep in contact with your account manager who will keep you up-to-date on market movements.
With Donald Trump self-isolating in the White House… or not as recent events suggest, the US election has had a spanner in the works. After contracting the coronavirus recently, Trump has stated “Don’t let it dominate you. Don’t be afraid of it” which has received widespread criticism as the disease has killed more than 1m people worldwide. Will these recent developments help his campaign or damage it? According to the President’s twitter, if he bounces back onto the campaign trail, he will be an “invincible hero”.
Biden currently leads in the national polls 49.8% to 41.5% against Mr Trump. This does not guarantee a victory, as seen in the 2016 elections when Hilary Clinton had a clear win according to the polls and we all know how that ended. America faces an epic choice in November and the result will have global repercussions... Transatlantic ties, superpower relations and climate change among other issues will be affected.
In other news, Californian fires have burned more than 4 million acres in 2020. The US state has suffered five of its six largest wildfires in history this year. As the wildfires rage, local businesses and homes will suffer which could impact the wider US economy.
Get in touch with your account manager to discuss these factors in more detail, and how your upcoming currency transfer could be impacted.
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