A rebound in risk sentiment has allowed GBP to make up some lost ground against USD and EUR after dropping to four-week lows last week. The cable market dropped off to just above 1.36 last Friday for the first time since 20th July and the EUR market was down to 1.1640 for first time since 22nd July.
A welcome drive in major stock markets has created a ‘risk on’ environment that historically tends to favour sterling against major ‘safe haven’ currencies and has created the footing needed for a GBP rally. GBP is currently trading at 1.3720 against USD and 1.1685 against EUR (as of 9:15am).
The US Dollar has also been on the back foot this week following investor concerns around the spread of the Covid-19 Delta variant across the US. The ever-rising infections have hit the US hard and are causing worries among policymakers and economists. In a nod to the spreading Delta variant, the Federal Reserve has announced that they will hold their annual ‘Jackson Hole’ economic policy symposium virtually this year. Following the meeting, Fed chair Powell is set to speak on Friday and it is expected he will provide further clarity on how and when the Fed plans to begin the tapering of its bond-buying programme.
In UK stock market news, Just Eat is set to be removed from the FTSE 100 market following a watchdog investigation that has deemed the entity to be Dutch and therefore ineligible to trade on the FTSE UK Index. Supermarket chain Morrisons and defence firm Meggitt have both been recommended as replacements following Just Eat’s departure.
Have a great day.
Jack Nicholls, Senior Relationship Manager.
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