Daily Currency Update

Get access to our expert daily market analyses and discover how your currency has been tracking with our exchange rate tools.

UK lockdown restrictions lower as US/China tensions rise

GBP - British Pound

Yesterday Boris Johnson announced how Britain will start to lift lock down measures, starting on Monday. This will be a phased approach. The new rules allow up to six people to meet outside (including a garden) as long as they keep to the ‘social distancing rules’. As the UK begins to ease it’s lockdown measures, we should see Sterling denominated currency pairs begin to trend higher.

Today Rishi Sunak is expected to tell employers how much they are going to have to contribute to the government's wage subsidiary program from August. Once the onus is put back on employers and the furlough scheme begins to filter out, potentially ending in October, it is expected unemployment will rise dramatically. These unemployment figures could become a huge burden on the government and may be Sterling’s downfall in the coming months. Firms want to gradually bring back staff on a part-time basis as they re-build their business and begin operating at full capacity. The figures suggest around 8.4million people were furloughed, costing the UK government £15 billion.

Sterling was fairly muted yesterday against the Euro and the Dollar and has been at the mercy of the markets this week with a lack of economic data reported, it is a similar story next week with only Final Services PMI being reported on Wednesday morning.

Key Movers

The Dollar brushed off another 2.1m jobless claims and some of the worst durable goods orders and GDP reports on record as tensions seem to be coming to a head between the US and China once again. The US State Department no longer sees Hong Kong as having significant autonomy according to Secretary of State Mike Pompeo, paving the way for President Trump to impose a new set of penalties.

We expect an announcement from US President Donald Trump today, who promised to be tough on China. These increased tensions have seen US treasuries push higher and oil prices drop.

EUR/USD tested the 1.11 handle as optimism grew within the Eurozone, due to the recovery plan announcement, estimated to total €2.7 trillion over 7 years. This will hopefully kick-start the European economy. The backing of the plan by Germany and France should see the program implemented, however all 27 EU countries will have to give their approval to this plan, including the “frugal four” (Austria, the Netherlands, Sweden and Denmark).

Expected Ranges

GBP/USD: 1.2240 - 1.2380 ▼

GBP/EUR: 1.1040 - 1.1160 ▼

GBP/AUD: 1.8450 - 1.8660 ▼

GBP/NZD: 1.9760 - 1.9920 ▼

GBP/CAD: 1.6920 - 1.7040 ▼