Daily Currency Update

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Sterling Suffers Setback

GBP - British Pound

After a positive week for Sterling so far, yesterday we saw the tide turn and a sharp sell off against most currencies. Sterling fell by over 1% against the euro and the dollar. The main reason for this shift in momentum for Sterling can be attributed to fresh comments from the UK government reiterating their stance that Britain is not open to extending the Brexit transition period. Putting further pressure on the upcoming negotiations.

To add to this, fresh headlines around potential negative interest rates from the Bank of England also weighed on Sterling yesterday. Andrew Bailey commented in the Guardian that the central bank is ready to do more and that risks are to the downside for a longer, hard recovery. Although, the BoE chief economist Andy Haldane did his best to cool any speculation of negative interest rates, stating they are not ‘remotely close’ to going negative in order to support the UK economy.

Key Movers

The Euro got a huge boost yesterday as the ECB announced a €750bn stimulus package in order to prop up the Eurozone economy. €500bn will be dispersed as grants and the remaining €250bn will be accessible in the form of loans. Italy will be the benefactor, receiving up to €90bn in order to help them recover from the effects of Covid-19. EUR/USD broke the 1.10 handle on the news.

China’s parliament has approved a bill imposing national security legislation on Hong Kong. Riot police have been deployed across Hong Kong, after there were over 360 arrests on Wednesday. The US has commented on the situation with Mike Pompeo stating that he no longer see’s Hong Kong as a separate entity to China.
Look out for US GDP (2nd release) data today at 1pm, alongside US Consumer Spending data (2nd release).

Expected Ranges

GBP/USD: 1.22 - 1.2325 ▼

GBP/EUR: 1.1105 - 1.1220 ▼

GBP/AUD: 1.8480 - 1.8630 ▲

GBP/NZD: 1.9780 - 1.9920 ▲

GBP/CAD: 1.6810 - 1.6950 ▼