IFX Market Report: Wednesday 8th July 2020

Sterling enjoyed its best run in three weeks yesterday, buoyed by fresh Brexit optimism and ahead of Chancellor Rishi Sunak’s parliamentary mini-budget later today.

A spokesman for Prime Minister Boris Johnson said chief UK and EU negotiators would dine in Downing Street on Tuesday evening for informal talks. There has been no further reaction in early trading thus far today.

Investors are today awaiting details of the government’s plans to support the UK economy, with the Chancellor due to unveil more spending plans in parliament later. UK corporations are hoping for aggressive measures.

Investors remain generally cautious however, with the possibility that the reopening of bars and restaurants this weekend may be met by local lockdowns in the coming weeks.

GBPUSD opened at 1.2472, climbing to 1.2589 before closing at 1.2566

GBPEUR opened at 1.1069 and hit a high of 1.1146 before closing at 1.1128

The US Dollar Currency Index, measuring strength against six major counterparts, was 0.15% higher at 96.889 yesterday, despite the currency losing a cent versus the pound.

There was no data to move markets and with risk appetite still tempered by fears of a second wave of the virus, the dollar remains broadly firm. US health official Anthony Fauci stated yesterday that the current state of the outbreak in the United States is ‘really not good’.

Today is very light on the economic calendar across the board and risk sentiment will be the prominent driver.

The euro remains largely in the background this week, giving up 0.7% to a buoyed sterling yesterday, but making slight gains versus the dollar.

A lack of fundamental data today will likely see the single currency in a reactive role.

EURUSD opened at 1.1266 and briefly broke 1.13, before closing at 1.1292

Elsewhere, in Australia lockdown measures were reimplemented in its second biggest city on Tuesday, with Melbourne residents confined to their homes unless undertaking essential business for a further six weeks.

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