GBP finished July with gains across the board to conclude the month, finishing the week as the best performing major currency. Throughout July, sterling managed to gain over 7.7% against the notably weaker US dollar and has now recovered to the levels seen pre-Covid in the UK.
The data calendar is looking very light for GBP today, with traders eyeing Thursday as the big day of this week. The Bank of England meet on Thursday to vote on the interest rate changes for the next quarter. Whilst again there are not expected to be any rate cuts, and for the headline rate to remain at the record low of 0.1%, markets will always turn to the following press conference for hints as to what the bank is predicting for the coming months. If the UK economy is requiring further stimulus with bank intervention, then we could see GBP fall back against the major currencies.
An off the cuff comment has also seen GBP strengthen, after Michel Barnier, Europe’s chief negotiator in the Brexit trade talks, said he is still hopeful of an agreement with the UK for the formal future relationship. This also matches up with the newly released timeline from the UK government, showing trade talks are due to continue into October. The next round is due to start on the week of 17TH August, so it remains to be seen if European politicians will cut their summer recess short.
Down under, the Australian state of Victoria has entered into stage 4 restrictions, after more Covid cases have been reported and the spread has not slowed down. This means retail stores will close again for 6 weeks and the construction and manufacturing industry will have to reduce working hours. With the uncertainty, GBPAUD has gained 4.15% to sit at 1.8402 at the time of writing.
Have a great day
Author: Jack Nicholls, Relationship Manager
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