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Market Update

• Posted by currencies in Bank of England, Brexit, coronavirus, Currency, Economy, Sterling, UK, Uncategorised
• July 30, 2020
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Sterling rose against a weaker euro but fell versus the dollar after the $1.30 level reached late in the previous session did not hold, with Brexit and the economic fallout from coronavirus weighing on the currency.

Global market sentiment was boosted after the head of the U.S. Federal Reserve, Jerome Powell, said the bank would “do what we can, and for as long as it takes” to limit the coronavirus damage to the United States’ economy, but optimism was tempered by record-high COVID-19 infections.

The dollar fell while Powell was speaking, with the pound reaching $1.30 for the first time since early March, but the dollar recouped some recent losses early on Thursday.

GBP investors remain in a cautious wait-and-see approach as UK-EU trade negotiations (the key driver of the currency) appear at a standstill.

Investors are generally bearish on the pound as the UK and European Union have made little progress on post-Brexit trade arrangements.

The EU’s banking watchdog said on Wednesday said that banks using Britain as a gateway to the EU must put in place their plans for serving EU customers before the transition period ends.

The outlook for the UK is also hampered by Britain’s high COVID-19 death toll. British Health Secretary Matt Hancock said the number of coronavirus cases in the country is no longer falling and is at best flat.

He also said he was worried about a second wave of coronavirus infections in Europe and that the government would not hesitate to bring back quarantine measures if necessary, to keep Britain safe.