Good morning,
Yesterday’s trading session was a fairly depressing one for sterling; following the confirmation of Britain’s entrance into, and limited bounce out of, a long expected coronavirus recession. Although the pound did continue to hold its head above the 1.30 neckline against a weak dollar, the resumption of a downward trend against the euro is what many traders will look to, as EU trade talk fears jump onto the bleak economic picture.
As mentioned before, markets are looking to see which countries and economies can bounce out of their coronavirus slumps, with GDP data releases being critical to guiding sentiment. Britain’s confirmation of recession was never in any doubt, but the nature and speed in which it emerges is still up for debate – with yesterday’s confirmed slump of -20.4% being more than any European country and double that of the USA’s. In short, in the global race to economic recovery, sterling has just fallen over at the starting line with its shoes tied.
With this in mind, countries are not only jostling to get ahead of their peers economically, but also to try and be the first over the line to find a viable coronavirus vaccine. Russia stunned the world this week by announcing it had produced one inside of 2 months and it was looking to roll it out immediately. Unfortunately for Putin, the world reacted with a mix of scientific suspicion and concern rather than elation, but it does highlight a potential overtaking opportunity for the UK, as its Oxford University based trials are already in advanced testing stages. If the UK can make up for lost ground and win this sprint, it could lead to the back end of the economic recovery marathon looking a lot less daunting.
Have a great day.
Author: Josh Haden-Jones, Senior Relationship Manager
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