The pound held near the 1.27 mark on Thursday as traders reduced their short positions on the pound ahead of the G20 meeting this weekend. With the hopes of a trade truce between Presidents Donald Trump and Xi Jinping leading to a rise in demand for riskier assets. The pound fell 0.1% against the dollar whilst being largely steady against the euro. The Japanese yen and Swiss Franc fell slightly.
The Conservative Party leadership contest continues with Boris Johnson still the front-runner. The date of the election is Tuesday 23rd July.
Although both candidates have stated their preference for reaching a deal with the EU, markets are now more concerned that this will be achievable and are instead looking to how alternative scenarios might play out, including a no deal, a general election and a second referendum.
GBPUSD opened at 1.2689 and rose in the morning to reach a high of 1.2713 close to midday. However, these gains were erased in the afternoon, hitting a low of 1.2668 and closing at 1.2674
GBPEUR opened at 1.1168 and reached an early afternoon high of 1.1180 but quickly lost this ground later on to close lower at 1.1146
The dollar was steady against most major currencies on Thursday as most traders awaited news out of the G20 summit. Reports eased concerns that Trump might impose $300 billion on Chinese goods but this was not enough to sway financial markets that will continue to remain on edge, as there is still a perceived uncertainty surrounding the outcome of this meeting.
A report detailing the expansion of the US economy did little to enthuse traders despite showing a 3.1% annualised pace of growth in the first quarter of 2019. The index tracking the dollar against the euro, yen, sterling and three other currencies was little changed yesterday, after reaching a three-month low on Tuesday.
Elsewhere, the Chinese yuan rose 0.2% against the dollar, benefiting from increased risk appetite but the safe-haven yen also benefited slightly, up 0.03% as traders are still concerned that trade tensions will not be quickly resolved and will further the argument for multiple rate-cuts in the US.
EURUSD opened at 1.1359 was fairly steady across the day, rising to 1.1379 close to midday but closing nearer where it opened at 1.1369