GBP - British Pound
Sterling has experienced consistent losses throughout September against the US Dollar, as a 4.5% loss is recorded. With highs of $1.3477, it shows how much news of a second lockdown and Brexit woes have affected the British currency, as it now trades just above $1.27.
Fortunately, Michel Barnier has began to send the pound rising once again, as the EU chief negotiator claims he is ‘determined’ to get a deal done and is currently in London for informal talks. Gove has added to the optimistic feel, as he expressed his confidence in the likelihood of a deal and that Brexit can overcome its difficulties to secure a free-trade deal with the EU.
Sterling will likely see a bounce on Thursday as well, as Sunak is due to announce a replacement for the soon-to-end furlough scheme. Without a new scheme, Britain’s unemployment rate could soar to as high as 7.5% by the end of the year, which would obviously worsen the governmental burden in unemployment benefits. The government continues to face the dreaded economic-social trade-off, where they must determine how to keep the economy afloat whilst still protecting the public and NHS.
The US Dollar has renewed it’s safe-haven status in September, as COVID second waves cause death rate spikes across Europe. Investors once again move to the US Dollar as a vessel to hold funds until more attractive opportunities arise. The US Federal Reserve has demanded the US government issue further fiscal support, as a match for the interest rate cuts made earlier this year.
The big news for the EU this week is Thursday’s German IFO business sentiment. It’s expected to show a bounce in German economic data, however this will likely not provide a heap of support for the Euro.