The pound suffered last week as Brexit concerns and risk sentiment affected performance. Friday saw a 1% fall in value versus the US dollar to drop below the 1.25 level for the first time in two weeks. Fears over a second wave of coronavirus cases have dampened risk appetite and impacted sterling against the dollar. Friday also saw the economy shrink by a quarter over March and April, though this was broadly shrugged off by markets.
Today sees an intense round of trade talks between the UK and EU, following the government’s weekend reiteration that there will be no extension sought to the December deadline. Any such request needs to be submitted by July 1st. Whilst expectations are high on the UK side, Brussels has stated that today’s negotiations are a long overdue stock-taking exercise.
This week’s attention will be focused on Thursday’s Bank of England policy meeting. Though interest rates are expected to remain untouched, the bank is expected to announce a fresh increase of at least 100 billion pounds to its stimulus program.
GBPUSD opened at 1.2626 and closed at the daily low of 1.2486
GBPEUR opened at 1.1153 and lost marginal ground, closing at 1.1129
The US dollar remains driven by risk appetite, benefitting greatly on Friday from fresh fears of a second wave of coronavirus infections and a possibility of further lockdowns.
Versus the pound, the greenback pushed upwards to break above 1.25 for the first time since June 1st and also gained back a cent against the euro.
Tomorrow is the key day of the week Stateside, with the release of core retail sales figures and Fed Chair Powell testifies to the Senate monetary committee.
The euro has been holding in a tight trading range versus the pound, with Brexit concerns not impacting the pairing significantly as yet. Friday saw a reverse of recent gains versus the dollar, with the single currency losing a cent as a risk-averse market strengthened the US currency.
EURUSD opened at 1.1321 and closed at the daily low of 1.1219
Elsewhere this week, Thursday also sees the Swiss central bank policy meeting. The Australian unemployment rate is also released early on the day.
Canada has inflation data published on Wednesday, with core retail sales figures due on Friday.
