The euro got off to a robust start this week, striking a two-week high against the US dollar.
The political furore surrounding the prime minister’s chief advisor and UK scientific advisors warning against easing lockdown too soon gave investors little cause for confidence.
Demand for the pound weakened further as Beijing threatened retribution if the UK extended visa rights to Hong Kong citizens, sparking fears of fresh trade disruption.
A sharp decline in April’s UK car production figure added to the bearish mood, highlighting the extent of the challenge still facing the economy.
It’s likely Brexit will drive GBP exchange rates this week as the UK and EU hold their latest round of talks.
Confirmation that the UK services PMI remained deeply in contraction territory in May could also keep GBP exchange rates limited this week.
Unless the index sees a positive revision the odds of a major second quarter economic contraction are likely to limit the appeal of the pound on Wednesday.
Even if the corresponding construction PMI bounces back from the record low seen in April this is unlikely to offer any significant boost to GBP exchange rates.
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