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.
Sterling initially stumbled last week, with the UK’s strongest construction PMI reading in two years failing to offset some lingering Brexit jitters.
However, GBP exchange rates were quick to bounce back, with investors turning bullish towards the pound ahead of Chancellor Rishi Sunak’s ‘summer update’.
This was the main focus for the week, with Sunak announcing stimulus measures worth £30bn directly aiming at protecting and creating jobs during the UK’s post-coronavirus recovery.
While GBP investors welcomed the new stimulus package, analysts cautioned that more needs to be done if the Chancellor is to prevent a ‘cliff edge’ of mass unemployment later in the year.
The second half of the week then saw further upside in Sterling tempered by fresh Brexit uncertainty after EU officials warned that ‘substantial differences’ remained between the UK and EU following talks in London.
Turning to this week, it looks like the pound may struggle to extend its recovery, with Sterling sentiment already being knocked by a weaker-than-expected GDP reading in May.
Adding to the pressure later in the week is the UK’s latest jobs report, with economists forecasting a jump in unemployment and slump in wage growth in May.
On top of this, GBP investors will also likely have to contend with more Brexit driven uncertainty as analysts remain pessimistic on the chances of any kind of breakthrough in this week’s negotiations.
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)