Over the course of yesterday’s trading session, Sterling looked to give away some of its gains and resume its downtrend, shedding against both the euro and the dollar as EU trade talks faltered. As I mentioned last week, sterling is going to be increasingly driven by headlines during this period, with the last 48 hours of trading being a perfect example: on Tuesday, a rumour hit the market that a fisheries agreement was in the works, yesterday, David Frost told Parliament that the EU’s offer “was not a mandate that is likely to produce an agreement.”
It is likely that these fluctuations off the back of the trade talks will continue until at least Friday when they conclude, with the pound being at the mercy of comments made from politicians, negotiators, journalists and pretty much anyone with verifiable access to the discussions. Furthermore, if markets get the feeling from the press statements and comments made that the talks have indeed yielded nothing substantial; the drive lower could continue up until the 15th of June, when the EU Council will meet to discuss the progress, with UK Prime Minister Boris Johnson widely expected to talk in person with EU President Ursula von der Leyen on the matter.
With updates emerging throughout today and tomorrow, it is certainly worth contacting your account manager to discuss ways of locking in the small gains sterling has offered up over the course of the week; as with trade talk headlines, lockdown woes, possible negative interest rates and an end of the month deadline for an extension – the pound has a lot of tall hurdles to jump in June.
Have a great day,
Author: Joshua Haden-Jones, Senior Relationship Manager
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