Daily Currency Update
GBP - British PoundAs the equity markets remain subdued, Sterling was very much on the front foot yesterday, particularly against the US Dollar, reaching its highest point versus the greenback in 2020. A second night of intensified talks between negotiators in London signify that progress could be made, and buoyed by recent positive news around the approval of the Pfizer vaccine, investor confidence with the pound remains strong. It’s not all plain sailing from here on in for Sterling though, and a mini sell off in this morning’s early hours of trading suggest that there is plenty left to do. France has dug its heels in once again, stating that it would veto any deal that doesn’t give them enough access to UK waters for its fisheries. However, some deem this as slightly short sighted, as the damage to both sides of the negotiations from a no deal Brexit and its impact on the ever-important financial services sector, would leave a much larger hole in both the UK and Europe’s pocket. The financial sector is a dominant part of the UK’s economy and not having access to our biggest trading partner, the EU. In the same light, European companies are also eager to retain access to the UK’s extensive derivatives market.
Key Movers
Yesterday also saw another milestone in the currency markets, as the EUR/USD exchange hit its highest point in over 2 years. The pair broke 1.21 and this morning, traded as high as 1.2160, as renewed confidence in the Euro and a general US Dollar sell off saw the pair benefit. The US Dollar index shows the currency remains at multi year lows in comparison to its G10 peers. Stimulus packages are yet to be approved in both the single market bloc and the States, but promising rhetoric from both areas suggest we are not far away from packages being secured. This will do much to continue the trend of risk appetite that may see Sterling and the Euro continue their runs against the US Dollar. The only thing standing in their way now is a Brexit deal.
Expected Ranges
- GBP/EUR: 1.1020 - 1.1095 ▲
- GBP/USD: 1.3430 - 1.3400 ▲
- EUR/USD: 1.2120 - 1.2185 ▲
- GBP/AUD: 1.7980 - 1.8300 ▲
- GBP/NZD: 1.8840 - 1.9185 ▼