The pound struck lower again on Tuesday as the announcement of new coronavirus restrictions in the UK and a dire warning from Boris Johnson spooked investors.
The BoE announced it would be expanding its quantitative easing programme by £100bn, but simultaneously slow the pace of its bond purchases.
This prompted GBP exchange rates to plummet amid speculation the BoE will come under pressure to do more, given the myriad of challenges still facing the UK economy, and that this ‘will fuel discussion of negative interest rates’.
However, the Sterling sell-off was mostly in the latter half of the session, with the pound actually finding some support at the start of the week thanks to some fresh Brexit optimism from Boris Johnson.
Following a phone call with European Commission President, Ursula von der Leyen, the PM expressed his hopes that a deal will be reached by the end of the year, even claiming that with a ‘bit of oomph’ an agreement could be in place in July.
Looking ahead, movement in the pound this week is likely to depend on the UK government’s announcement regarding a further easing of lockdown measures.
Johnson announced that hospitality sector, cinemas, museums, and galleries will be allowed to reopen from 4 July, whilst also relaxing the 2m distancing rule to 1m.
This may trigger a jump in Sterling if GBP investors are optimistic on the chances of this fuelling a notable recovery in the UK economy at the start of the third quarter.
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)