The pound trended broadly lower through June, the currency being primarily undermined by concerns over the UK’s economic trajectory.
Sterling initially got off to a slow start last week, undermined by lingering Brexit concerns after the EU’s Chief Negotiator warned the current state of talks makes a deal ‘seem unlikely’.
While concerns over Brexit continued to mount amid fears the resignation of EU Trade Commissioner Phil Hogan could delay Brexit talks, the pound swiftly started to recover. This caused some analysts to warn that GBP investors are growing complacent over the risks of a no-deal Brexit.
Spurring GBP exchange rates higher in the middle of the week was Downing Street’s rejection of rumours Boris Johnson could step down as PM in early 2021 due to his health.
The pound then extended its gains sharply through the second half of the week as Bank of England (BoE) Governor Andrew Bailey spoke at the Federal Reserve’s annual Jackson Hole Symposium.
Bailey claimed that central banks are ‘not out of firepower’ suggesting the BoE is open to more quantitative easing and the possibility of negative interest rates.
Turning to this week, the publication of the UK’s latest PMI figures could offer the pound another leg up if they confirm growth in the private sector soared in August.
At the same time, however, the upside in the pound could be stifled by growing concerns that changes to the government’s job retention scheme could lead to a spike in job cuts as employers have to start contributing to the wages of staff on furlough.
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)