Sterling falls on Brexit concerns
Monday 24 August, 2020
Daily Currency UpdateGBP - British PoundSterling has fallen since Friday morning, despite manufacturing and services data coming in better than expected. GBP/EUR is back under 1.1100 after making a break for 1.1200 on Friday and GBP/USD, which had touched over 1.3250, is now wavering above and below 1.3100. The manufacturing and services data both came in above the expansion figure 50.0 and exceeded the forecast figures. But with warnings of an impending crises for retailers, a jobs crunch, ballooning public debt and signs that a Brexit trade deal won’t meet its end of year deadline, this was only going to weigh on the pound. The UK furlough program, which has protected millions of jobs since the Covid-19 lockdown occurred, is due to end in October. After this date we are likely to see the extent of unemployment as businesses still continue to be hindered. Brexit negotiations hit a stumbling block last week as an agreement cannot be struck on fishing rights. The EU chief negotiator warned that a deal is unlikely unless this hurdle can be jumped.There is no local data for the pound today or elsewhere for that matter, so eyes and ears will likely remain fixed on Brexit and Covid-19 developments.
Key MoversThere has been an element of optimism at the start of trade this week as US health regulators authorised a Covid-19 treatment over the weekend. The US government is considering fast-tracking AstraZeneca’s experimental vaccine. This would see the use of blood plasma from patients who have recovered from Covid-19 as a treatment for the disease. This news has been welcoming for riskier assets such as the AUD, NZD and CAD as investors and traders look at alternatives to safe haven currencies. Each of the GBP, EUR and USD have lost ground against these currencies since the markets opened up overnight. The move towards risk isn’t likely to be sustained at the moment with ongoing global concerns such as the pandemic and trade tensions.
- GBP/USD: 1.3075 - 1.3150 ▼
- GBP/EUR: 1.1030 - 1.1125 ▼
- GBP/AUD: 1.8180 - 1.8290 ▼
- GBP/NZD: 1.9950 - 2.0080 ▼
- GBP/CAD: 1.7170 - 1.7280 ▼