Sterling was off to a shaky start yesterday, dropping to a fresh 30 day low against USD. Cable slipped down to 1.4035 for the first time since 13th May. GBP also tumbled down to 1.1590 against the EUR over the course of the morning, later recovering to tread water above 1.1600 throughout the afternoon session. The markets have opened at 1.4115 against USD and 1.1635 against EUR.
Recent news of a decision made by the UK government to delay the lifting of lockdown restrictions across the UK has weighed heavily on the pound early this week. Analysts are now predicting that GBP has already absorbed the worst of the impact, with Johnson setting his eyes on July 19th as the next target date for full removal of all social distancing restrictions. In more positive news, UK unemployment data was released yesterday, breathing some hope into the UK labour market. UK employment has increased for 6 straight months, with the unemployment rate now sitting at 4.7%, only 0.8% away from the pre-lockdown figure of 3.9% (March 2020).
In the calendar today, UK inflation was released this morning with a promising reading of 2.1%. With UK inflation now above of the Bank of England’s 2% target, an increased chance of an interest rate hike in the coming months could play nicely into the hands of GBP. Across the pond, the US Federal Reserve is releasing their Monetary Policy Statement, Economic Projections and coveted Interest Rate Decision. Little action is expected as an unchanged 0.25% decision on rates is viewed as the most likely outcome. Analysts and traders will keep a keen ear to the ground for any tone on future interest rate moves, or changes in stance on current monetary policy.
Have a great day.
James Camp, Relationship Manager.
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