A two-day European Council meeting will kick-start in Brussels today, where the UK Prime Minister, David Cameron and European Central Bank (ECB) President, Mario Draghi, are expected to hold post-Brexit talks. In other recent developments, a panel discussion with the US Federal Reserve (Fed) Chairwoman, Janet Yellen and the Bank of England Governor, Mark Carney, which was scheduled tomorrow in Sintra, Portugal stands cancelled as both the central bankers decided to focus on soothing market jitters closer home.

On the data front, the UK’s CBI distributive trades report is due in some time. In the Euro zone, data showed that German import price index rose above expectations in May. Across the Atlantic, final reading for the US gross domestic product (GDP) is the key data point today. Weak figures could deal another blow to market sentiment after the shocking Brexit vote last week.

Pound Sterling – UK Markets

The Pound erased some of its losses driven by Britain’s decision to leave the EU and bounced off its lowest point in more than three decades against the greenback this morning. The CBI distributive sales report is the sole economic release in the UK today and is expected to continue its upward trend in June. Later today, the UK Prime Minister, David Cameron, will attend his final scheduled meeting with the European Council in Brussels before he relinquishes the top post.

Yesterday, Sterling continued its free-fall in the aftermath of the referendum results to exit the EU and tanked to a 31-year low level against the US Dollar, despite efforts by the UK Finance Minister, George Osborne to relieve some of the tension surrounding the nation’s political and economic outlook. In a fresh blow to the UK, Standard & Poor’s downgraded the nation’s sovereign credit standing from “AAA” to “AA”, followed by Fitch, which also slashed its credit rating from “AA+” to “AA”. Prior to this, Moody’s rating agency has cut UK’s credit outlook to negative.

US Dollar – US Markets

Yesterday, the US Dollar continued to trade higher against most of its major peers, as the unrelenting wave of uncertainty triggered by last week’s Brexit referendum vote helped the currency to retain its safe-haven status. On the data front, a preliminary report on US services PMI showed that activity in the nation’s services sector remained subdued in June and the employment component registered its weakest reading since December 2014, thus further adding to concerns about the loss of momentum in the US labour market. Additionally, the nation’s goods trade deficit widened in May. Further, the Dallas Fed’s business activity index showed only a slight improvement in June. The index has been languishing in the negative territory since January 2015.

Going ahead, there is a string of economic releases in the US today. These include the final reading of the nation’s first quarter GDP along with consumer confidence and the S&P/Case-Shiller home price indices data. In addition to this, a speech by the US Fed Governor, Jerome Powell, is also eagerly awaited.

Euro – European Markets

The shared currency is trading mixed against the US Dollar and the Pound this morning. Data released earlier in the session showed that German import prices advanced above expectations in May. On the other hand, a gauge of French consumer confidence dropped this month. Also, Spanish retail sales advanced less than expected in May. Separately, Italian consumer confidence declined in June. However, the nation’s business confidence index recorded a rise in the same month. Looking ahead, market participants eagerly look forward to the ECB President, Mario Draghi’s speech at the two-day European Council meeting in Brussels, where he is expected to brief European leaders about the impact of the UK vote on the Euro zone.

Yesterday, the Euro continued its outperformance against the Pound, with the Euro – Pound currency pair hitting fresh 2016 highs and rising to level not seen since late March 2014. Separately, the ECB President, Mario Draghi, expressed “sadness” at Britain's vote to leave the European Union.

Other Currencies – Highlights

The Japanese Yen reversed its previous session gains and is trading lower against the US Dollar this morning. Speculation that Japan could introduce stimulus measures to mitigate the effects of the Brexit crisis weighed on the Japanese Yen, which has soared since the Brexit referendum vote, as investors looked for solace in the safe-haven currency. Going ahead, Japan’s retail sales for May is scheduled for release overnight and is expected to post a sharper decline in comparison to the previous month’s reading. Further ahead, market participants await Japan’s national consumer price index, industrial production, manufacturing PMI, unemployment rate and the Tankan survey data, all due this week.

Earlier in the session, Japan’s Finance Minister, Taro Aso, warned to intervene in the nation’s currency market if the Japanese Yen rises excessively. He further stated that he will not hesitate to introduce measures meant to stabilise Japan’s financial and currency markets.