Increased Restrictions Derail the Pound
Tuesday 22 September, 2020
Daily Currency UpdateGBP - British PoundSterling reached a one week low on Monday as difficulties in the banking sector causes unease for investors risk appetite. Yesterday a report was released stating that some UK banks had moved illicit funds over the past two decades. Sterling dropped 0.9% against the US Dollar dropping below the 1.28 handle.Furthermore, the ever rising Covid-19 cases in Britain prompted Chris Whitty, the government’s Chief Medical Officer and Patrick Vallance, its chief scientific adviser to hold a press conference where they stated that if no new restrictions were put in place the epidemic would 50,000 cases per day by mid-October.This morning the UK government’s rhetoric changed, stating that if you can work from home, you should. This is a clear change in direction from previous rhetoric over the past couple of months where they had been actively encouraging people to go back to work if possible. Boris Johnson will be speaking about new and increased restrictions in Parliament today sometime after 11:30am.
Key MoversThe dollar performed well yesterday, with EUR/USD breaking back below the 1.18 handle, after virus fears contributed to a risk-off appetite in the foreign currency markets. With the US Dollar being a safe-haven currency, investors flocked to it on Monday and this morning. The Euro was weighed down by negative comments from the ECB President Christine Lagarde, stating that the economic recovery remains very uncertain, uneven and incomplete. Lagarde reiterated that the ECB stands ready to amend all its instruments as appropriate and the increased exchange rate put prices under downside pressure.
- GBP/USD: 1.27 - 1.2840 ▼
- GBP/EUR: 1.0805 - 1.0970 ▼
- GBP/AUD: 1.7680 - 1.7850 ▼
- EUR/USD: 1.1690 - 1.1780 ▼