The pound gave up some of last weeks gains on Monday which were sparked from the UK’s new finance minister being likely to introduce looser financial conditions. Rishi Sunak replaced Sajid Javid as finance minister during a cabinet reshuffle. Despite the initial rise in the value of the pound, yesterday sterling shed 0.3% against both the dollar and the euro.
Investors have maintained their long positions for the pound as they believe government spending will help boost optimism and this comes alongside an improved outlook for the UK economy. Public sector jobs look like they will rise at the same rate as private-sector jobs for the first time since 2008. The Bank of England left interests rates on hold last month and the extent to which PMI data continues to show recovery will be the key driver for rate sentiment.
GBPUSD opened at 1.3037 and fell steadily across the day, closing at 1.3013
GBPEUR opened at 1.2026 and was fairly stable, dipping only slightly across the day to close at 1.2006
The euro remained near its three-year lows against the dollar on Monday as investors fear weak growth in the region. German business sentiment indicator today will give a clearer light on the eurozone economy. The impact of the coronavirus on the region has also kept investors on their toes. The overall impact on the euro has meant it has lost 2.3% against the dollar this month.
The dollar index remains at its strongest since October last year with the US economy proving more resilient than the eurozone and Japan. The Japanese economy shrank 1.6% in the final quarter of last year. The US economy is expected to remain strong, but the retail sales and industrial production numbers released on Friday were disappointing.
Elsewhere, the Australian dollar was stable as investors reassessed the new coronavirus data, citing an increased number of cases but a lower number of deaths. The Chinese yuan gained 0.1% against the dollar.
EURUSD was stable, opening at 1.0841 and closing almost unchanged at 1.0836