IFX Market Report: Tuesday 16th June 2020

Sterling had a relatively quiet day yesterday, only making slight gains versus a weaker US dollar. There was no headline Brexit news, though the pound remains sensitive to output from the ongoing negotiations, as well as changes to the external risk environment.

UK and EU leaders did agree on Monday that talks on the future relationship should be stepped up to finalise a deal. The pound remained flat against the euro throughout the day.

This morning has already seen the release of unemployment data, with the figure of almost 600k being slightly worse than anticipated. So far, this has had little impact on sterling value.

Attention will remain focused on Thursday’s Bank of England policy meeting.

GBPUSD opened at 1.2526 and made marginal gains, closing at 1.2565

GBPEUR opened at 1.1136 and closed at 1.1134

The US dollar gave some ground yesterday, following the Fed announcement that they would be purchasing individual corporate bonds in the secondary market. This led to a rally for riskier assets and a move away from the greenback.

The Fed said it will start buying corporate bonds today through one of several emergency facilities recently launched to improve market functionality in the wake of the crisis.

The dollar index fell 0.47% in afternoon trading to 96.73. Against the euro the dollar was 0.52% weaker and versus the pound it lost 0.36%.

This afternoon sees the release of core retail sales data.

The euro had another flat day yesterday, particularly versus the pound, but did take advantage of a weaker afternoon dollar to trade over half a percent higher.

The single currency remains reactionary and struggling to make any impact in its own right.

EURUSD opened at 1.1256 and closed at 1.1285

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