European session review: GBP mixed as global risk appetite deteriorates and uncertainties about EU-UK post-Brexit relationship and domestic economy reopening return in focus

GBP traded mixed against other major currencies in the European session on Tuesday as global risk appetite deteriorated somewhat and uncertainties about the EU-UK post-Brexit relationship and the UK's economy reopening returned in focus.

The pound fell against EUR and safe-haven currencies, but it was firmer against commodity currencies.

The fourth round of trade talks between Britain and the European Union (EU) finished last Friday and both sides stated that limited progress had been made. London has until the end of July to request an extension to the Brexit transition period, which is due to end on December 31. However, the UK's officials have continually insisted they would not extend the transition period beyond that date.

The British Paymaster General Penny Mordaunt told parliament today that the UK would not be extending the Brexit transition period and that their policy on zero quotas and zero tariffs had not changed.

On Monday, the British government introduced new 14-day quarantine rules for international arrivals. The new rules are very unpopular with airlines and travel companies, warning of the severe damage they can cause to the aviation and travel industry. 

Market participants are awaiting more information about the British government's plans for the further reopening of the UK economy. The prime minister is expected to discuss further lockdown easing with his cabinet this week. Downing Street stated on Monday that the government “continued to follow the road map” published by the government last month. 

In addition, the global risk sentiment was dented somewhat by Germany's April trade data, which revealed that the country's exports fell at the sharpest pace since records began in 1950 due to the coronavirus-related lockdown measures.