Good morning,
August has to go down in recent memory, as far as pound commentary goes, as one of the more surprising ones on record. Despite the sand in the Brexit hourglass continuing to fall, sterling has managed to confound markets by pushing on and above its recent low ranges on a near weekly basis. Of course, it has to be noted that the extremely weak US dollar has aided in the recent 2.40% rise on GBPUSD; but it’s GBPEUR where most have been surprised, with the pair pushing to an 11-week high at 1.1246 last week.
Be in no doubt, these rates are far from where they ought to be considering the mere month the UK has to agree upon trade terms with EU – as mentioned in previous blogs – Q4 is likely being kept aside for no-deal planning on both sides of the Channel. Moreover, reports this morning seem to point towards the UK struggling not only with a trade talk impasse, but also with its ability to pay its debts with regards to the huge amount of money being paid into furlough schemes over the coronavirus pandemic. Whilst it is true that such spending has been critical to the UK economy and the pound alongside it, limitless outgoing without incoming are impossible to maintain and some of the tax increase rumours from Westminster are starting to build the idea of a tough winter for Britain.
On the data front, at 10am we have Eurozone inflation and unemployment figures for August, which will be examined closely by the markets, as August did provide the emergence of second waves in some countries. At 150.00 we also have US manufacturing data to note, with a modest recovery expected as Americans in work returned to their factories.
Have a great day. 
Author: Joshua Haden-Jones, Senior Relationship Manager
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