Daily Currency Update
GBP - British PoundThe pound has started the week on the back foot with GBP/USD falling back towards 1.23 and GBP/EUR dropping under 1.10 for the first time since March. The pound is susceptible to risk off moves and with stock markets falling at the end of last week its not surprising the pound has taken a bit of a hit. Also, slowly creeping back into the headlines is Brexit with a large gap existing between the UK and EU over the terms of its future trading arrangement. As long as Coronavirus continues to remain under control in the UK, then Brexit will become more of a driver for the pound as we head deeper into 2020 with only just over six months before we are set to leave the bloc with or without a trade deal done. A major test to keeping Coronavirus under control will occur this weekend when many parts of the hospitality sector in England reopen. The 4th of July sees pubs and restaurants open their doors for the first time since March with managers expected to enforce social distancing by clients having to book tables and staff offering table service instead of the usual queuing at the bar. There will likely be some trial and error over the first few days with all across the country hoping we don't see a rise on Covid-19 cases on the back of the move. Data-wise its a pretty quiet week from the UK with no top tier releases so Coronavirus and Brexit developments will likely guide sterling's direction.
Key Movers
A grim milestone was reached over the weekend with Covid-19 officially claiming 500,000 victims globally. Over 125k of these victims have been from the United States with concerns growing over the rising number of cases in southern states, in particular, Florida and Texas. Officials are warning that hospitals could soon be overwhelmed and have tightened restrictions on the amount of people allowed in bars and restaurants. Like the UK, the US will face a major test this week as it enjoys a long weekend to celebrate the 4th of July Independence Day holiday, an event that traditionally sees parties and gatherings happen across the country. This could lead to a further rise in cases which is the last thing President Trump will want with opinion polls starting to consistently put him further behind Democrat presidential candidate Joe Biden ahead of November's election. Equity markets have taken a bit of a hit of late over concerns of the rising number of cases in the US. The Dow Jones Index has dropped over 2500 points throughout June as investors get jittery and shift into more traditional safe haven assets such as gold and the yen. The euro has held up relatively well, enjoying a semi safe haven status with EUR/USD keeping above 1.12 and pushing higher against sterling too. There is little data from the eurozone this week however there is a plethora from the States culminating with Thursday's Jobs Report. 3m extra jobs are predicted to have been added in June, slightly more than was seen in May after April's huge fall. The level of unemployment is expected to drop to 12.5% from 13.3%
Expected Ranges
- GBP/USD: 1.2290 - 1.24 ▼
- GBP/EUR: 1.09 - 1.1080 ▼
- GBP/AUD: 1.79 - 1.8040 ▼
- GBP/NZD: 1.91 - 1.9250 ▼
- GBP/CAD: 1.68 - 1.6940 ▼