Stimulus Package Agreed by European Union
Wednesday 22 July, 2020
Daily Currency UpdateGBP - British PoundGBP volatility continued during yesterday’s trading sessions and into today. GBPEUR broke the 1.11 handle, only to sell off back down to the 1.10 handle on today's European open. GBPUSD peaked over the mid 1.27s. to then drop back below 1.27 at the open today. The downside pressure on GBP can be attributed to a number of news outlets publishing articles suggesting that Britain is extremely close to abandoning hope any a trade deal with the European Union. The articles suggest many ministers believe Boris Johnson will not meet the July deadline to get a trade deal in place, and we will exit the European Union on the World Trade Organisation terms. Since these news articles broke GBP has lost 1% of its value against the USD and the EUR. With no economic data out of the UK today, GBP continues to be at the mercy of the markets.
Key MoversYesterday EU leaders reach an agreement for a historic stimulus package to reinvigorate the EU economic landscape which has been ravaged by Covid-19, comprised of loans and grants. The plan was approved by all 27 member states, a great sign of solidarity for the bloc, after rumoured opposition from the frugal four in recent weeks. This has seen EUR/USD push well above the 1.15 handle and hold overnight. With European economic data continuing to improve, Covid-19 cases under control and now the stimulus package agreed upon, things are certainly looking more positive for the European Union. In Trumps first address to the nation regarding Covid-19 in a while, he conceded that the situation "get worse before it gets better". Furthermore, in a change of rhetoric he also stated that Americans should wear face coverings as “they’ll have an effect”. This a clear u-turn on previous policy.
- GBP/USD: 1.26 - 1.2740 ▼
- GBP/EUR: 1.0950 - 1.1050 ▼
- GBP/AUD: 1.77 - 1.7850 ▼
- EUR/USD: 1.15 - 1.16 ▲