Throughout Thursday, GBP pairs had a shaky session whilst deviating near 1% against both the euro and the US dollar, opening the day at around the 1.0950 and 1.2975 marks respectively. The largest sell off of the day came as the Bank of England announced the Monetary Policy Committee had been briefed on negative interest rates. As the UK’s central bank heads into Q4, the committee are exploring ways in which negative interest rates can be “implemented effectively”. A shadow which has hung over the UK since the coronavirus outbreak could now be emerging from the dark.
There was light relief for sterling traders however, as gains were swiftly made back, as the president of the European Commission, Ursula von der Leyen, said she is “still convinced it can be done” when talking about the trade deal between UK and Europe.
UK retail figures released at 7AM BST were also better than expected, now increasing over 4 consecutive months. The rise is being put down to continued strong online sales and mainly DIY stores seeing increased sales volumes. As the population continues to spend more time at home, more time is allocated to improvements.
How long these gains to GBP can last are not known. The World Health Organisation has declared there is a “very serious” situation unfolding in Europe with Covid cases on the rise again. Closer to home in the UK, Health Secretary, Matt Hancock told BBC Breakfast the Government is “prepared to do what it takes” to combat the virus. As rumours start to swirl that a second nationwide lockdown could be implemented, the BOE may have to introduce the negative interest rates sooner than wanted.
Have a great weekend.
Author: Jack Nicholls, Relationship Manager
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