Good morning,

Economic data still provides a vital insight into the inner workings of various economies but the expectation around good and bad data has changed somewhat during Covid-19. There is an expectation and a willingness to overlook poor data and to write it off as a temporary “glitch”. This kind of approach is very much a ‘burying the head in the sand’ vision and could result in underlying trends being missed. We will do our best to pick out the most relevant positive and negative changes in the currency markets, so your business can cut through the background noise.

UK inflation has dropped to a four year low with the core reading at its weakest level since October 2016, which is not an unexpected result. The knock-on effect is how the Bank of England will react with additional stimulus, as this latest reading will certainly encourage additional QE to flow into the UK economy. Combine this with the fear-factor of negative rates, which we can’t escape, and GBP is becoming easier to sell against than its Euro and Dollar neighbours. The Bank of England will announce their interest rate decision tomorrow, so be prepared for extended GBP volatility that could extend throughout the rest of the week. If you’re worried about GBP moving lower, we have tools to help mitigate this risk both in the short and longer-term – please speak to your account manager.

The markets are still very much enjoying a risk-on and risk-off mandate to decide where the price is going in the short term. For now, at least at the time of writing this update, risk has cooled as stocks enjoy a small rally this morning.

Reuters reported that September should be earmarked as a month of Brexit “hot phase” negotiations, as pressure tactics from both sides try to force last-minute successes. This is contradictory to recent conversations where both sides had claimed they were close to agreeing on compromises.

GBPEUR remains stuck in a sideways trend with 1.1267 being the higher-end of the range, whilst GBPUSD is finding the path of least resistance is lower at 1.2595.

Have a good day.

Author: Alistair Hutson, Senior Relationship Manager


Whilst every effort is made to ensure the information published here is accurate, you should confirm the latest exchange rates with WorldFirst prior to making a decision. The information published is general in nature only and does not consider your personal objectives, financial situation or particular needs. Full disclaimer available here.