There is little to write about the pound, with the currency continuing to hover at 7-week lows. It is more of the same, with Brexit concerns and an economy that is the worst performing G10 this month, keeping sterling down.
There is also the prospect of negative interest rates, which were referred to yesterday by BoE Chief Economist, Andy Haldane, as being looked at with greater urgency. However, the general consensus is that the bank is more likely to expand its quantitative easing program.
Overall investor outlook for sterling is negative, with one prominent investment bank advising clients that implied volatility and risk reversal points to further downside potential.
Bank of England Governor, Andrew Bailey, is due to speak this afternoon.
GBPUSD opened at 1.2245 and had marginal daily fluctuation, closing at 1.2261
GBPEUR opened at 1.1182 and did manage to squeak upwards, closing at 1.1213
The US dollar softened slightly versus the euro yesterday, as data showed that homebuilding activity dropped by the biggest margin on record in April.
Risk appetite has also increased slightly, with investors taking heart from encouraging early-stage data for a potential coronavirus vaccine.
President Trump said on Tuesday that he will sign an executive order directing federal agencies to eliminate any unnecessary regulations that could stand in the way of economic recovery.
The single currency is holding its own after a Franco-German proposal for a fund that would offer grants to European Union regions and sectors hit hardest by the coronavirus pandemic. It is seen as a possible indicator that joint fiscal harmony may be achieved in tackling the economic fallout.
The euro was also supported by a survey showing German investor sentiment improved much more than expected in May, as concerns eased over the impact of the coronavirus pandemic on Europe’s largest economy.
EURUSD opened at 1.0953 and closed at 1.0933
