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Sunak to announce schemes to kick start economy - Euro currency news daily

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GBP - British Pound

Chancellor of the Exchequer Rishi Sunak is due to give a speech today in parliament outlining plans of how he intends to reboot a UK economy battered by the effects of the Coronavirus pandemic. With the UK set for its worst recession since the early 1700's Sunak is expected to unveil a series of schemes including subsidising work placements for 16-24 year olds, raising the stamp duty threshold to £500k, green initiatives such as paying for homes to have insulation upgraded, a grant for the arts sector and potentially a VAT cut for the hospitality sector. Sunak has been widely lauded for his efforts to protect workers throughout the shutdown with his furlough scheme paying the wages of around 9m private sector workers. His latest set of plans to support the economy as it returns to work will be closely scrutinised this afternoon. UK government debt is predicted to hit levels unseen since shortly after WW2 as the UK borrows big to try and enable a quick V-shaped recovery.

Currency markets seem to hold confidence in Sunak with GBP/USD back above 1.25 and GBP/EUR finally making a decisive break above the 1.11 handle. It should be mentioned though that all of these plans are against the backdrop of a potential hard Brexit at the end of year so expect sterling gains to be capped until this issue is resolved (or not).

Key Movers

Yesterday evening's eye-catching headline was the confirmation that Brazilian President, Jair Bolsonaro, has tested positive for Coronavirus. The president's handling of the outbreak has widely been criticised as he has shunned social distancing keeping the economy open while over 66k have died while over 1.6m confirmed cases have been registered, both second only to the United States.

The recent stock market rally seems to have come to a halt for the time being as Coronavirus once again begins to spook financial markets. The rising number of cases in Southern US States, the lock down of Melbourne, Australia and ongoing tensions between the US and China are putting a slight dent in risk sentiment this morning.

Another development was confirmation that the US will be pulling out of membership of the World Health Organisation next year after giving it one year's notice of its intention to leave. President Donald Trump has accused the WHO of colluding with China in covering up the scale of the Covid-19 pandemic. An accusation that the WHO and China both refute.

Data-wise its another quiet day with tomorrows US unemployment claims the next main talking point. Around another 1.4m Americans are expected to have filed for unemployment insurance last week. EUR/USD trades at 1.1290 and USD/JPY is at 107.50. Gold is within touching distance of $1800 an oz. for the first time in over eight years.

Expected Ranges

GBP/USD: 1.2460 - 1.2620 up

GBP/EUR: 1.1050 - 1.12 up

GBP/AUD: 1.7960 - 1.8120 up

GBP/NZD: 1.9080 - 1.9235 up

GBP/CAD: 1.6980 - 1.7110 up

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Eurozone Economic Calendar

Monday 6 July

08:30 Sentix Investor Confidence(Jul)
09:00 Retail Sales (YoY)(May)
09:00 Retail Sales (MoM)(May)
19:30 CFTC EUR NC Net Positions

Wednesday 8 July

08:45 ECB's De Guindos speech
09:00 European Commission releases Economic Growth Forecasts
14:00 ECB's De Guindos speech

Thursday 9 July

00:00 Eurogroup Meeting

Friday 10 July

07:00 EcoFin Meeting
19:30 CFTC EUR NC Net Positions