Good morning,

Earlier this week Sajid Javid struck a firm tone about lifting restrictions on 19th of July, despite cases being on the rise.

The news didn’t do much to lift sterling’s spirits however, as it continued to lose ground against the US dollar for a fourth consecutive day. One of the factors is the uncertainty around the delta variant and its ability to resist vaccines. Until it’s clear that it’s robust enough to do so without putting undue pressure on the NHS, sterling is unlikely to continue its recent run.

In the medium- to short-term there is hope against the euro though. Markets are starting to pay more and more attention to central bank policy when it comes to raising interest rates. Whoever moves first could see its currency surge, due to the increase of foreign investment funds looking for higher returns.

Seeing that the ECB is projected to be furthest away from such a rise (projected in 2024 at the earliest, vs the Bank of England in 2022) it could mean that the pound is better supported against the single currency.

Have a great day.

Thomas De Caluwé, Relationship Manager.

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