Daily Currency Update

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Brexit concessions boost Sterling

GBP - British Pound

Yesterday we saw a sharp recovery in Sterling, comfortably breaking the 1.23 handle against the Dollar and 1.12 against the Euro respectively. These were the highest level in over two weeks. The move higher can be attributed to rumoured progress on Brexit negotiations. According to the most recent reports, the EU is to relax its stance on fisheries and talks will carry on next week. This offers a glimmer of hope that both sides will offer concessions in order to get a deal done by the end of June.

Yesterday we saw the release of UK CBI Distributive Trades Survey on realised sales, which decreased by 50% in May, this number met the market's expectations.

Furthermore, upbeat comments from Bank of England Chief Economist Haldane supported the currency. He stated that the outcomes are a shade better than their scenario however that’s about where his optimistic views ended. Haldane still sees a 20% contraction in Q2 with fewer stabilisation in jobs. In fact he doesn’t think the labour market will return to pre-COVID levels until 2023.

We don’t have any UK data releases today.

Key Movers

The hopeful headlines of a prospective COVID-19 vaccine and ambitions for a V-shaped recovery for the global economy offered a positive lift to global risk sentiment. The upbeat market mood was evident from a strong rally in the global equity markets and weighed heavily on the US dollar with its safe-haven status.

The unrest in Hong Kong has continued after China proposed new controversial national security law. Small protests broke out in Hong Kong and police had to fire pepper pellets at groups who gathered as MPs began to debate a bill that would make insulting China’s national anthem a criminal act.

Expected Ranges

GBP/USD: 1.2230 - 1.2390 ▲

GBP/EUR: 1.1160 - 1.1270 ▲

GBP/CAD: 1.6880 - 1.6990 ▼

GBP/AUD: 1.84 - 1.8560 ▼

GBP/NZD: 1.9720 - 1.9920 ▼