Pound cheered by Boris Johnson’s return to Downing Street
Philip McHugh April 28th 2020 - 2 minute read
The pound came out on top on Monday as markets were relieved to hear the UK government finally had clear leadership again with the return of Boris Johnson.
Sterling appears to be consolidating these gains this morning, with GBP/EUR stable at €1.1477 and GBP/USD flat at $1.2409. GBP/CAD is rangebound at C$1.7444, while GBP/AUD and GBP/NZD are holding steady at AU$1.9222 and NZ$2.0649 respectively.
Coming up today, the UK’s latest retail report could undo the pound’s gains on the expectation of a sharp drop in activity in April.
What’s been happening?
The pound opened this week’s session on the front foot as Boris Johnson returned to Downing Street to resume his duties as Prime Minister.
However, these gains were capped by Johnson’s acknowledgement that while the UK has begun to ‘turn the tide’ against the coronavirus, he is not yet prepared to ‘throw away the effort and sacrifice’ of the British public by relaxing the lockdown too soon.
Johnson’s reluctance to lift the lockdown came in stark contrast with European leaders, with the euro edging higher at the start of the week as several European countries prepare to ease restrictions.
Despite being some of the countries worst hit by the coronavirus outbreak, Italy, Spain and France are set to reopen parts of their economy next month, much to the delight of EUR investors.
With many other countries around the world also preparing to lift their lockdowns the market mood was notably more positive on Monday, greatly limiting the appeal of the safe-haven US dollar and leaving the currency weaker against its peers.
What’s coming up?
Looking ahead, the only economic data of note today will be the publication of the Confederation of British Industry’s (CBI) distributive trade index.
Expect the pound to face some headwinds if the index points to a sharp fall in UK retail activity this month.
Elsewhere the focus for investors will remain on the coronavirus crisis.
For the US dollar this could lead to further losses if reported cases continue to drop and more countries start exploring ways in which to reopen their economies.
Meanwhile, EUR investors will be keeping a close eye on the situation in Europe, well aware that any spikes in cases could see countries scrap plans to ease lockdown measures.