Home Daily Commentaries GBP declining against the USD

GBP declining against the USD

Daily Currency Update

The pound has been declining against the US dollar since Friday. The pair broke below the 1.29 handle before the weekend break and has since further declined to lows of 1.2730 this morning - these are levels not seen since September 2020. Friday's decline may have been due to market sentiment and worse than expected UK economic data. The Gfk consumer sentiment hit its worst level since 2008, along with UK Retail Sales coming back weaker than expected.

Investors could be looking for more news today regarding Boris Johnson and how he may be forced to resign once the findings of Sue Gray’s review of lockdown-breaching parties in Whitehall are revealed. The Prime Minister was present in at least 12 events at No 10 and fined for the celebration of his 56th birthday held in the cabinet room. Political uncertainty can mount pressure on the pound.


Key Movers

European Central Bank President Christine Lagarde said on Friday that the central bank’s purchase programme could end in early Q3 and added that interest rates could be raised in 2022. Her words sounded more optimistic compared to Thursday’s speech but did little to strengthen the euro.

The French Presidential Election was won by Macron with exit polls showing that Emmanuel Macron won with around 58% of the votes. This news has done little to support the EUR against the USD. Speculations over the tightening of the US Federal Reserve’s monetary policy intensified sharply last week after optimistic comments from policymakers. Markets are now pricing in a near 70% chance of a potential interest rate increase to 1.50-1.75% by the end of the first half of 2022.

Expected Ranges

  • GBP/USD: 1.2695 - 1.2765 ▼
  • GBP/EUR: 1.1815 - 1.1895 ▼
  • GBP/AUD: 1.7685 - 1.7895 ▲
  • EUR/USD: 1.0705 - 1.0765 ▼