Gray Structure

19 JUNE 2020

HOW HAS THE POUND BEEN PERFORMING?

Against the US Dollar                                              

This week, the Pound opened against the US Dollar just above 1.2500 trying to move towards the 1.2550 region but failed, falling down to near June lows of 1.2450. GBP managed to recover above 1.2600 by Tuesday early morning with a broad Dollar weakness due to an increase of Covid 19 cases in China & the US which has triggered concerns that a second pandemic wave would cripple the incipient economic recovery.

 

The Pound didn't last too long at the 1.26 region, after the US posted their retail sales, which came out at a record 17.7% in May against the expected figure of 5.8%, pushing the Pound lower to 1.2550. During mid-week, the Pound has been hovering around this level and on Thursday, The Bank of England posted their Pandemic economic recovery plan where speculation in the market expected the UK to lower interest rate to a negative figure, but results came out the same leaving rates at 0.10%.

 

They also announced an extra £100 Billion stimulus plan to help recover the economy. The Pound fell to 1.2401 after the BoE news, but with UK retail sales figures in May posted a strong come back of -13.1 instead of -17.1 allowed the price to push back up to 1.2450.

Against the Euro

This week the Pound opened against the Euro just below 1.11 but quickly managed to push above this level. On Tuesday morning the UK released unemployment rate which came out much better than expected, despite the furlough scheme still in place, the rate came out at 3.9% instead of expected 4.5% giving Sterling some relief to go higher to 1.1220 at mid-day.

 

This didn't last long, as the markets are predicting the long term view is a weak Pound, due to the UK announcing an extra £100 billion plan to stimulate the economy through Quantitative easing, pushing prices (as see to the right) down to 1.1055 for the weekly low.

Brexit, Covid & Economic Data


Please note, Politics and Economics are both setting a main driver for the Pounds movements much more than other currencies. We may see some more volatility across the next few months especially if the UK's economic figures come out poor, bringing a negative impact on the Pound. On a positive note for the Pound, Trump has renewed threats to cut ties with China which will be a be a big concern for the US Dollar.

ECONOMIC CALENDAR

Next week​

22nd-26th June 2020

Monday
12:30 US Chicago Fed National Activity
14:30 US Existing Home Sales

Tuesday
07:15 EU French Markit Manufacturing PMI
07:30 EU German Markit Manufacturing PMI
08:00 EU Markit Manufacturing PMI
08:30 UK Markit Manufacturing PMI
13:45 US Markit Manufacturing PMI

Wednesday
08:00 EU German IFO Business Climate
08:00 EU German IFO Current Assessment
13:00 US Housing Price Index

 

Thursday
11:30 EU ECB Monetary Policy Meeting Accounts
12:30 US Durable Goods Orders
12:30 US Core Personal Consumption
12:30 US Initial Jobless Claims
12:30 US Gross Domestic Product
17:00 UK BoE's Haldane Speech

Friday
12:30 US Personal Consumption Expenditures
12:30 US Personal Spending
12:30 US Personal Income
14:00 US Michigan Consumer Sentimen

IN OTHER NEWS

Retail sales continue to bounce back in June

UK retail sales continued their bounce back in June, as the reopening of shops released pent-up demand. The amount of goods sold last month increased by 13.9%, said the Office for National Statistics (ONS). The rise followed record falls in April and a partial recovery in May as the corona virus pandemic led to widespread shop closures and hit spending.

Sales were boosted by food stores, which reached new highs for the pandemic period. Compared to February, volumes of food sales were 5.3% higher while non-store retailing grew by 53.6%.

Source: BBC News

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