Daily Currency Update
GBP - British PoundThe pound rallied against the US dollar on Monday, regaining some ground on the world’s most traded currency. The GBP/USD pair fell below the 1.38 handle for the first time since April on Friday on the back of the shock Fed announcement. The pound may have rallied more, but there was a fairly muted reaction to Boris Johnson announcing he would leave income tax rates unchanged. It is likely the British currency is still being contained by the rising number of COVID cases, which has increased from 9,284 to 10,633 overnight. Italian ministers have weighed on the growing UK infection rate and have claimed that the EURO 2021 final should be held in Rome, rather than London. A longer term positive for sterling comes in the form of further trade negotiations. Britain is to start negotiating to join the Trans-Pacific Partnership (SPTPP), made up of 11 nations, including Australia, Canada and Japan. Getting an agreement such as this in place would give the UK access to a reduced-tariff market of over 500m people and will likely leave sterling trading much higher against its major peers.
Key Movers
CB president Lagarde gave an optimistic outlook of the economic health of the Eurozone, as the bloc continues to recover from the pandemic slowdown. ECB policy maker Mario Centeno also noted that all analyses indicate that the rising inflation in the Eurozone is temporary. The euro gained 0.41% against the US dollar, reaching the 1.1915 handle, after dropping into the 1.1800s on Friday.
Expected Ranges
- GBP/USD: 1.3815 - 1.4000 ▲
- GBP/EUR: 1.1575 - 1.1740 ▲
- GBP/AUD: 1.8380 - 1.8605 ▲
- GBP/CAD: 1.7085 - 1.7360 ▼