EU leaders agree budget deal

Leaders finally agreed cuts to the EU budget for the rest of the decade on Friday after a 25 hour negotiation in Brussels. David Cameron will claim victory as the first cut in EU spending in its 56 year history was announced, with a €34.4bn cut over the next 7 years.

The Euro, which had been subjected to a rollercoaster ride on currency markets through the week, did not benefit hugely in late trading on Friday, although it has started this morning on the front foot, gaining value against the Pound and causing GBP-EUR rates to fall sharply after the start of European trading.

Today we have very little important data due out so markets may focus on the EU budget, particularly after the Euro had most of the headlines last week with ECB President Mario Draghi talking down the single currency towards the end of last week.

The US Dollar has followed a similar pattern, with the Pound finishing strongly last week despite better-than-expected US trade balance figures, but rates are falling back this morning as the Pound seems to be on the back foot once again overall. Tomorrow sees the release of the main monthly UK inflation figure at 9.30am, which is usually influential on exchange rates, as will be the Bank of England quarterly inflation report on Wednesday morning.