As we enter a new week, over the weekend growing concerns over rising COVID-19 cases in the UK prove to be another hindrance to the pound’s already fragile status.
It has been reported that Health Secretary Matt Hancock said the country is at “tipping point” in regard to the recent spike in cases. Prime Minister Boris Johnson has also expressed grave concern about the potential consequences of a second wave, noting to MPs a second national lockdown would be an absolute and utter “disaster”. The Government currently await evidence on whether recently implemented measures are helping to slow the spread of the disease. Sadly, it has been said that the government's scientific advisers are “extremely pessimistic” about the cases over the next few months.
After bouncing back on Thursday from the EU’s positive comments to secure Brexit deal, on Friday cable as managed to sustain itself in the 1.29 range throughout the day. GBPUSD opened at 1.2979, and closed the session off at 1.2948.
It was a similar story for GBPEUR. With little price action on the day, the pair opened at 1.0951, and finally closed off just below at 1.0921.
As for EURUSD, a rather uneventful trading day for the pair. Opening at 1.1857, the pair closed just 1 pip below at 1.1856.
On the data front, Monday is limited in actual data releases, but in the afternoon ECB President Christine Lagarde will be giving a speech at 13:45. The President is likely to reaffirm the primary objective of the ECB’s monetary policy; which is to maintain price stability but keeping inflation below, but close, to 2% over the medium term. Any further comments on the performance of the euro may also prompt volatility in the single currency.
Following Lagarde, we have speeches from Fed members Lael Brainard, Robert Kaplan and John Williams later in the evening. All three members are considered centrist Fed members, similarly to Fed Chair Jerome Powell. Last week at the US’ latest Interest Rate decision, we saw the Federal Reserve boost its monetary response to the COVID-19 crisis by indicating there will be no interest rate hikes until the end of 2023 at the very earliest. Powell also reiterated that the central bank would not tighten monetary policy until inflation had been higher than 2% “for some time”. This was the same long-term outlook that was endorsed last month at the Jackson Hole Symposium and expect the speeches this evening to relay the same notions.