GBP had a third consecutive day of losses against the USD with yesterday being the largest, dropping around 0.75% to 1.3675, the lowest level since February. GBP also continues to slide against the EUR dropping 0.8% to 1.1572.
Freedom Day has arrived, however this has caused concern in the markets as the Delta variant spread could now worsen and slow the pace of global recovery. Investors are fearing that the rest of the world could see a similar spike in cases, which is of serious concern given the UK is one of the most vaccinated countries on the world. As a result, safe haven currencies have strengthened over the past week.
Over half the British population is fully vaccinated, and 70% have received at least one dose, although reaching the remaining adults is proving a difficult task as the drop in daily vaccinations is showing, which is causing further concern.
A member of BoE Monetary Policy poured cold water over rising expectations of interest rate hikes to cool inflationary pressures, and mentioned the bank must remain risk averse and keep its generous settings in place.
EURUSD stays on the back foot below 1.18, a fresh low since the start of April, with all eyes on Thursday policy update from the European Central Bank. The market does not expect any changes to policy however will listen closely to hear what the banks new 2% inflation target will mean for its monetary policy moving forward.
Have a good day.
Joseph Sidders, Relationship Manager.
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