Yesterday saw little sterling movement, with the currency maintaining its recent gains versus the US dollar and holding firm against the euro.
Bank of England Deputy Governor Jon Cunliffe had said on Tuesday that whilst the initial shock of the pandemic to the UK’s financial system is over, another sharp repricing of risk is still possible. This suggests that the pound may be set to sail in choppy waters, despite the easing of lockdown restrictions. Brexit risk continues to loom large in the minds of investors and sterling hasn’t benefited from the recent risk rally compared to other major currencies.
With nothing due out economically today, expectations will be focused on tomorrow’s GDP reading.
GBPUSD opened at 1.2748, closing at 1.2752
GBPEUR opened at 1.1223 and closed at 1.1233
The US dollar maintained 3-month lows versus a basket of currencies yesterday, following the Federal Reserve meeting the day before.
There were no policy changes, as expected, but the committee pledged to continue its asset purchases aimed at stabilising the ravaged economy. No measures to cap the rise of bond yields were announced, contrary to some speculation.
Core inflation data came in yesterday 0.1% down on expectations, though this had little impact on the currency.
In the eurozone, it’s been a very quiet week so far, with the single currency making gains on the back of competitor weakness. Today sees a host of EU group meetings throughout.
EURUSD opened at 1.1358 and closed at 1.1352
