As we embark on a new week, sterling has started trading strong, riding high off the rumours that a Brexit deal between the EU and UK may soon be reached. Last week sterling showed its gumption against its G10 peers, gaining ground on all of them at some point during the trading week. Against the EUR, sterling spiked 0.77%; and against the US dollar, the pound managed to gain 1.5% for the week.
Given the turbulent week it had had, cable showed little volatility on Friday. GBPUSD opened steady at 1.2924, before closing the session a fraction above at 1.2927.
As for GBPEUR, somewhat of a similar story. The pair opened at 1.1022 and closed at 1.1042 – 20 pips above where the pair started the session.
UK Prime Minister and President of the European Commission Ursula von der Leyen had a phone call on Saturday to further discuss “stock-taking of negotiations” and “next steps” of the future UK-EU relationship. It was later reported that the phone call was a success, with both Johnson and von der Leyen agreeing to step up negotiations to close any “significant gaps”. FX Strategist at ING Bank, Francesco Pesole note that if there are “no escalation in tensions and hints that negotiations are to continue should be enough to help the pound.”
As for EURUSD, this morning the pair has found some resilience trading above the 1.1750 mark. Friday proved to be less fortunate for the pair, opening at 1.1725, EURUSD lost ground during the day but managed to support itself above 1.17, closing off the week at 1.1705.
The dollar strength this morning is due to the news that White House doctors have said President Trump could be discharged today. Thankfully, it appears the POTUS will survive the virus – on Saturday Trump released a short video message to thank the staff at Walter Reed Medical Centre and confirm he is doing well. The President noted that “I came here, wasn’t feeling so well, I’m much better now”. As for the upcoming election, Trump didn’t fail to mention he will “be back soon” and he looks “forward to finishing up the campaign the way it was started.” In his usual zealous manner, he went on to add that “we’re going to beat this coronavirus or whatever you want to call it. And we’re going to beat it soundly!”.
On the data front, along with Retail Sales from the Eurozone, we have Composite, Services and Manufacturing PMI’s from Germany, the UK and US.
