After a disappointing end to last week with a lack of conclusive trade negotiations, Sterling is holding firm against the Dollar and Euro this morning as we embark on another trading week. Despite no progress being made on a post-Brexit trade deal at the EU Summit last week, markets are pricing-in that an agreement will be made.
Following the rollercoaster session on Thursday, GBPUSD had a comparatively quiet day on Friday. Opening the day at 1.2917, the pair closed the week off not too far from that mark at 1.2929.
As for GBPEUR, much of the same. The pair saw limited price action in Friday’s session. Starting the day at 1.1028, the pair closed the session slightly above that, at 1.1034.
As the Pound holds steady, over the weekend at an International Monetary Fund (IMF) video conference, Governor of the Bank of England (BOE) Andrew Bailey noted that the UK faces “an unprecedented level of economic uncertainty”. He went on to add that this uncertainty is “heightened now by the return of Covid… the risks remain very heavily skewed towards the downside.”. In regard to interest rates, Bailey asserted a rather dovish tone, saying that the BOE “assessment of negative interest rates, from the experience elsewhere, is that they probably appear to work better in a more wholesale financial market context, and probably better in a nascent economic upturn”.
Despite rising COVID-19 cases in mainland Europe and the markets increasing hopes of a US stimulus package, EURUSD is still managing to keep itself above the 1.17 handle. On Friday, the pair opened at 1.1713, before closing the session at 1.1716.
On the data front, a quiet day for economic releases but a host of speeches from the UK, Eurozone and US. Kicking off the day we have speeches from ECB members Guindos, Mersch, and President Christine Lagarde. Then at 13:00 we have a speech from Fed Chair Jerome Powell, followed by Fed members Williams, Clarida, Bostic and Harker. Then finally from the BOE, we have Jon Cunliffe speaking at 15:05.
