The pound initially opened last week’s session on stable footing as GBP investors welcomed Scotland’s lifting of its remaining coronavirus restrictions.
Sterling remains broadly muted so far this morning, with GBP/EUR subdued at €1.1563 and GBP/USD sliding to $1.3594. GBP/CAD and GBP/NZD are holding steady at C$1.7303 and NZ$1.9716 respectively, while GBP/AUD climbs to AU$1.8649.
Coming up, the UK government will reportedly outline an alternative for the Northern Ireland protocol today, in a move which could stir tensions with the EU.
What’s been happening?The pound continued to face heavy selling pressure on Tuesday, with the currency plunging to a six-month low against the US dollar, as Sterling sentiment was undermined by the UK’s coronavirus situation.
With daily infections climbing at an alarming rate, doubts about the sustainability of England’s reopening appear to be putting increasing pressure on GBP exchange rates.
This downside in the pound was further reinforced by Brexit uncertainty as the UK’s chief Brexit negotiator, David Frost threatens to violate the Northern Ireland protocol.
The US dollar, meanwhile, remained well supported yesterday, with the continued deterioration of market sentiment amidst uncertainty over the global economic recovery, bolstering demand for the safe-haven ‘greenback’.
At the same time, the euro traded with modest gains yesterday, accelerating against its more risk-sensitive peers, but being tempered by concerns over Europe’s coronavirus resurgence.
What’s coming up?Looking ahead, the pound could extend its losses today as the UK government is expected to outline its proposals for an alternative to the Northern Ireland protocol.
This seems almost guaranteed to anger the EU, which has already threatened to take legal action if the UK continues to violate the Brexit deal agreed to at the end of last year. Any flare up in tensions could send the pound lower.
Meanwhile, any movement in the euro could prove limited today as EUR investors brace for the conclusion of the European Central Bank’s (ECB) latest policy meeting on Thursday.
Finally, we may see the US dollar maintain its upward trajectory today, assuming that market sentiment continues to sour.
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)