The pound retreated on Thursday after the Bank of England (BoE) struck a more cautious tone than expected following its latest policy meeting.
Sterling traders closely watched the latest round of Brexit trade negotiations and upbeat comments from Michel Barnier boosted the currency.
According to sources present at the meeting Mr Barnier stated he remains ‘confident that a balanced and sustainable deal remains possible, even if less ambitious’.
The start of last week saw the pound benefit and enjoy its best day in three weeks after upbeat reports of a coronavirus vaccine, and optimistic comments about Brexit negotiations from Prime Minister Boris Johnson.
However, these gains were soon reversed as markets worried about the possibility of Britain facing a no-deal Brexit and the UK’s dire prospects as the economy emerged from the coronavirus crisis.
GBP was supported again at the end of the week after a slew of upbeat flash PMIs and data showing British businesses reported their fastest upturn in five years as shoppers spent more, pushing spending back towards pre-lockdown levels.
However, sentiment was shattered again by downbeat comments from the European Union after talks concluded at the end of the week.
Michel Barnier noted that London had not shown any willingness in negotiations as both sides tried to break the current deadlock.
Looking ahead, due to the lack of major economic data releases this week traders will continue to focus on the ongoing Brexit negotiations.
Further upbeat reports on the progress of negotiations between London and Brussels, and any optimistic comments from the European Union could send Sterling higher this week.
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)