Daily Currency Update

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Sunak announces SME safety net

GBP - British Pound

GBP found itself slipping once again on Thursday, as a combination of Rishi Sunak and the BoE left GBPUSD trading above the $1.27 handle. Sunak announced that the government will be helping viable businesses with their employee wages, as long as they work over 33% of their normal working hours. This will certainly act as a safety net for Britain, but many worry for the sake of small business owners and sole traders during this time. It is likely the government will experience a surge in total unemployment all together after the furlough scheme ends in October, leaving a higher economic burden due to the number of people applying for Universal Credit.

The BoE left their mark on the British currency too, as Bailey refused to rule out negative interest rates as a tool for Britain to combat the COVID slowdown. It seems this is still a backup option for Bailey, who has revised the BoE economic and inflation forecasts for 2021. GBP is down 4.9% against the USD this month, making it the pound's worst month since 2015.

Key Movers

The US Dollar is likely to face a slight decline in the lead up to November’s election, as the race begins to dominate all local, regional and national headlines. With Biden still favourite, the US Dollar could sell-off, as investors worry about his lack of drive for economic stimulus. Uncertainty could also weigh on the US Dollar, and therefore Trump's comments not committing to a peaceful transition of power if he lost the election has rocked the ship. He is scheduled to replace Supreme Court Justice Ruth Bader Ginsburg on Saturday.

EUR/USD dropped as the German Ifo business climate index came in worse than expected. There are concerns around the health of the European economy, as second wave fears continue to spread. Lagarde and the ECB are monitoring various elements of the economy very closely and are not afraid to intervene should they deem it necessary. Brexit negotiations will continue to weigh on both the Pound and Euro until an agreement is reached.

Expected Ranges

GBP/USD: 1.2685-1.2855 ▲

GBP/EUR: 1.0895-1.1100 ▲

GBP/AUD: 1.7920-1.8145 ▲

GBP/CAD: 1.6980-1.7155 ▲