The long road ahead

Today’s news headlines:

‘BoE warns UK economy will not exceed pre-Covid-19 levels until end of 2021’. The Bank of England has downplayed previous predictions that the UK economy could quickly rebound from the coronavirus-caused recession, saying that GDP will not exceed pre-pandemic levels until the end of 2021. The monetary policy committee voted to leave interest rates at 0.1% and keep asset purchases unchanged at £745bn. The BoE said that the initial hit from lockdown measures was not as bad as initially thought, and was optimistic about the outlook for unemployment for the remainder of the year. (Financial Times)

‘UK and Japan rush to secure post-Brexit trade deal’. Today, trade officials from Britain and Japan will attempt to wrap up the first post-Brexit free trade deal by agreeing on the final few sticking points in negotiations. The two sides will need to hammer out issues including Tokyo’s demands for cuts to Japanese car export tariffs and the UK’s requests for better access for services and agriculture. The deal will only have a small positive impact on the UK’s GDP and will largely mirror the trade deal signed between the EU and Japan in early 2019. (Financial Times)

Today's events, rates, and data 

• Investors are looking at the US Dollar with caution in the run-up to tomorrow's US labour market data, over fears that America’s economic recovery may fall behind other nations. The Dollar index remains around a two-year low while the Euro index sits around a two-year high. European stock futures fell along with Asian stocks as more uncertainty over US-China relations dominated proceedings. Gold moved further above $2,000, and US Treasuries gained.

Today's events

NZ Inflation Expectations: 1.43% vs 1.24% previously
German Factory Orders: 27.9% vs 10.4% previously
UK BoE Official Bank Rate: 0.10% vs 0.10% previously
BoE Gov Bailey Speaks: 12.30pm
US Weekly Jobless Claims: 1.30pm

Interbank rates:

GBP/USD: 1.3155
GBP/EUR: 1.1080
EUR/USD: 1.1875
USD/CAD: 1.3275