GBP/USD drops to five month low
Daily Currency UpdateThe market’s ongoing concerns over the spread of COVID-19 is benefitting the safe haven dollar, with sterling taking a hit as the Delta variant continues to advance throughout the UK. The recent surge could have been given a helping hand by England's progression to the final in the European Championship, with huge numbers seen at Wembley for the final and packed pubs throughout the country, causing a high number of infections. There were 96 deaths reported yesterday which was the highest number since March 24th and 46,558 positive cases.
Not aiding the pound’s cause is ongoing friction about the Northern Ireland protocol between the UK and EU which was agreed as part of the Brexit trade deal. The government isn’t happy about the implementation of the agreement which has effectively led to a border between Northern Ireland and the rest of the UK across the Irish Sea. Lord Frost who helped negotiate the agreement will air his concerns to parliament later today. GBP/USD trades around 1.36 with GBP/EUR at 1.1565.
Key MoversA strong dollar continues to be the main theme in the global forex space. An acceleration of cases of the Delta variant throughout the world after months of declines has spooked the markets and led many countries around the world to reinstate restrictions on daily life.
An example of this is Australia, where after months of keeping the virus out via border controls and decisive implementation of contact tracing when cases were reported, which is now being impacted. The impressive controls led to a slow roll out of the vaccine with only around 11% of the population now fully vaccinated. With the Delta variant now spreading, most of the country is back in lockdown as cases begin to escalate. As a result of this, AUD/USD which was trading above 0.77 back in mid-June is now down to the 0.73 handle, with further losses possible as the temporary closure of much of the hospitality and services sector impacts the domestic economy.
Cases in the Eurozone are also ticking higher with a notable jump seen in France, the bloc’s second largest economy. With this in mind there could be a cautious tone from European Central Bank chief, Christine Lagarde, when she holds a press conference after tomorrow’s ECB interest rate decision. No change in policy is expected and it could be any change in the pace of bond buying as the main area of focus. EUR/USD has slipped ahead of the announcement to 1.1760
- GBP/USD: 1.3560 - 1.37 ▼
- GBP/EUR: 1.1525 - 1.1660 ▼
- GBP/AUD: 1.8560 - 1.87 ▼
- GBP/NZD: 1.9635 - 1.98 ▼
- GBP/CAD: 1.7240 - 1.74 ▼