Daily Currency Update

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Sterling tries to find support

GBP - British Pound

There have been no notable macro-economic data releases in the past 24 hours, so Sterling seems to have been driven by recent sentiment. GBP/EUR hit a session low of 1.1064 and GBP/USD touched 1.3055 on the dip, but has ticked higher since. As Brexit talks struggle to progress, the only thing that seems to be in support of the pound is that headlines elsewhere are muting the EUR and USD. The risk of a resurgence of Covid-19 in Europe, especially after the first case of a person being reinfected with the virus has been recorded, seems to be holding the EUR back. With headwinds such as Covid-19, the US election and US-China trade concerns, this seems to be preventing greater gains for the USD.

There is some low-impact data being released this morning such as German business confidence data and UK survey data on consumer spending, but movement for GBPEUR will likely be small once released. However, this afternoon we see consumer confidence data from the US which should offer more guidance for GBPUSD.

Key Movers

Risk appetite has survived overnight as positive US-China trade talks reignite hope of an agreement. US trade representative Robert Lighthizer and treasury secretary Steven Mnuchin both had their scheduled call with Chinese Vice Premier Liu He last night and the statement following the call advised of constructive dialogue with both sides seeing progress. This, alongside news of a new Covid-19 treatment, has boosted risk sentiment into the second day of this week. Riskier assets such as AUD, NZD and CAD have all maintained gains seen Monday and have traded in narrow ranges against the USD and GBP. For example, both the GBP and the USD have traded within a 60 pip range.

As the week goes on, this sentiment will likely change as eyes turn to the markets first heavy-impact data releases. Thursday we await Federal Reserve Chairman, Powell, to deliver a speech that is expected to address the future approach to inflation, possibly allowing it to run hotter than 2% to make up for years of undershooting.

Expected Ranges

GBP/USD: 1.3030 - 1.3150 ▼

GBP/EUR: 1.1030 - 1.1110 ▼

GBP/AUD: 1.8230 - 1.8350 ▲

GBP/NZD: 2.0010 - 2.0140 ▲

GBP/CAD: 1.7210 - 1.7360 ▲