Daily Currency Update

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Sterling slips as stocks drop

GBP - British Pound

GBP/USD has slipped back under 1.26 this morning as market jitters in Asian markets have fed through to European bourses this morning. After UK Chancellor of the Exchequer Rishi Sunak's statement on Wednesday, sterling rose across the board as the extra fiscal stimulus revealed was well received by investors. GBP/USD topped out at around 1.2670, however has since fallen back as risk-off trade sees a flight to safe haven assets. Its cause wasn't aided by the EU's chief Brexit negotiator advising that there were still big gaps between the two sides after its latest round of talks. We can expect Brexit to have a bigger influence on sterilng's value the deeper we go into 2020, especially from September onwards.

Yesterday a further easing of lock down restrictions were announced for England with Monday seeing salons and beauticians being able to open their doors once again, and two weeks later gyms and leisure centres set to allow customers in once more.

The UK travel sector also got some welcome news when it was confirmed yesterday that people returning from over 60 destinations will not have to self quarantine on their return from holiday. Their is some discrepancy however as the Scottish govt still requires travellers returning from Spain to self-quarantine whereas the rest of the UK has waived the requirement. GBP/EUR is relatively unchanged at 1.1170

Key Movers

Asian stock markets have slumped overnight as a big sell off in Chinese stocks and continued coronavirus concerns saw safe havens sought. The traditional destinations such as the yen and the dollar have been the main beneficiaries in the forex world with EUR/USD down around a cent to 1.1260. Covid-19 flare ups in Tokyo, Melbourne and in particular southern US states continue to alarm investors. Of the record 61k new cases in America seen yesterday over 11k were from Texas, nearly 9k were from Florida over 4k were from Arizona with several other southern states seeing four digit rises. The rate of infection is continuing to accelerate in America with its death toll now over 133k. Donald Trump is now consistently behind Democrat rival for the 2020 election, Joe Biden in opinion polls as his handling of the pandemic draws wider and wider criticism.

Data-wise, yesterday saw another 1.3m Americans file for unemployment insurance bringing the total since the pandemic took grip to around 48.m which is greater than the population of Spain. It should be said that many have since returned to work, however the continuing claims figure is still over 18m.

Its a quiet end to the week with only Canadian employment numbers of note at lunchtime today. Coronavirus and global tensions against China will continue to dominate the news.

Expected Ranges

GBP/USD: 1.25 - 1.2660 ▼

GBP/EUR: 1.1080 - 1.12 ▼

GBP/AUD: 1.80 - 1.8160 ▲

GBP/NZD: 1.91 - 1.9260 ▲

GBP/CAD: 1.70 - 1.7140 ▲