According to the latest news the EU watchdog has suggested that UK banks must start getting prepared for a full Brexit.

With the Brexit transition period due to conclude by the end of this year banks which use Britain as a way in to the European Union must have finalised their plans prior to the end of 2020.

This means that some European banks have added more international branches/offices as well as some banks returning to the continent.

The watchdog suggested that there is ‘no mechanism for direct EU access in deposits or loans from January.’

The impact on the foreign exchange markets appears to have been minimal but it does highlight how problematic the end of the year could be in terms of the financial markets both here and in the Eurozone.

In the meantime with the UK imposing a self-isolation period of two weeks on people returning from Spain other countries could be soon added.

Culture Secretary Oliver Dowden has said ‘if we think there is a risk…we will impose those restrictions as soon as we think the risk has materialised.’ A number of countries appear to be on a shortlist which includes Belgium, Croatia and Luxembourg.

At the moment the Spanish government is at loggerheads with the stance of the British government as they want the Balearics and the Canary Islands removed from the measures.

The Pound made some gains during yesterday’s trading session with UK mortgage approvals coming in better than expected with juts over 40,000 mortgages approved during June compared to the expectation of just over 33,000.

Data Heavy Week Ahead for the Euro

We have a very busy day ahead for Euro exchange rates with a number of different economic data releases on the continent. German GDP data is released for the second quarter and as they are the strongest scountry in the region any indication as to how the country has performed during this time could provide movement for the Euro vs the Pound and the US Dollar.

This will be followed later this morning with the release of both Consumer and Industrial Confidence data for July as well as the unemployment rate for June. Expectations are for 7.7% so anything different is likely to cause a reaction for the Euro.

We end the week for the Euro with GDP data for the second quarter as well as inflation data for July. Inflation and GDP are  both key indicators as to the health of an economy so make sure you pay close attention to all the economic data in the Eurozone over the next two days if you’re in the process of buying or selling Euros.

USD Weakens Against GBP and EUR

The US Dollar has weakened almost 6% vs both the Pound and the Euro in the last month as the US appears to be struggling to contain the virus and opinion polls showing less faith in the current US President.

The US Federal Reserve met last night to discuss their latest monetary policy and although there was no change it appears as though the central bank will be willing to do what it takes in order to support the world’s leading economy.

Later this afternoon US GDP data is published for the second quarter as well as US jobless claims. Both employment and GDP has both been hugely impacted by the pandemic so any signs that the recovery is better than expected could see some Dollar gains later on this afternoon.

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