Yesterday was mostly about risk appetite and sterling was the loser, particularly against the US dollar.

Amid growing concern that virus cases are on the rise again, investors turned away from riskier assets and back into safe-haven currencies. Whilst the Prime Minister unveiled an easing of lockdown restrictions in England, in the British Medical Journal esteemed medics signed an open letter on Wednesday warning of the risk of a second wave.

The pound also came under pressure after the EU chief negotiator said yesterday that a deal is possible, but the UK needs to give clear signals it is ready to work towards one. The two parties are set to miss their agreed end-of-June deadline for assessing whether the UK’s financial services regulation is to be considered equivalent to EU regulatory standards.

In an interesting note to clients, one major bank suggested that Brexit has ensured that sterling will function more as an emerging market currency, rather than a core G10 player.

There is no economic data due for release today.

GBPUSD opened at 1.2504, closing at 1.2436

GBPEUR opened at 1.1061, closing at 1.1032

The US dollar benefited yesterday from escalating fears of a second coronavirus wave and trade concerns. As risk appetite waned, the greenback edged higher.
Washington yesterday stated that it is considering changing tariff rates for various European products as part of the ongoing aircraft dispute.

There is a lack of fundamental data today Stateside.

The euro has been buoyed this week by the surprisingly encouraging PMI figures and yesterday continued its momentum, gaining 0.3% versus the pound. Against the dollar, the currency softened slightly as risk aversion returned to the markets.

There are no economic releases for any of the majors today.

EURUSD opened at 1.1304, closing at 1.1273

In other news, the Canadian dollar weakened to a 10-day low after it became the first country to lose its AAA rating as a result of coronavirus-fuelled government spending.

In New Zealand, policymakers left interest rates unchanged yesterday at 0.25%.