Pound retreats amidst lack of Brexit progress

Philip McHugh July 24th 2020 - 2 minute read

The pound tumbled yesterday, undermined by fresh Brexit anxiety as the latest round of UK-EU trade talks ended in deadlock again.

Sterling appears to have stabilised this morning however, with GBP/EUR rangebound at €1.0964 and GBP/USD stable at $1.2727. GBP/CAD is flat at C$1.7084, while GBP/AUD and GBP/NZD are holding steady at AU$1.7967 and NZ$1.9209, respectively.

Coming up, the pound may mount a recovery today on the back of the UK’s latest retail sales and PMI figures.

What’s been happening?

The pound was back on the defensive again on Thursday as GBP investors were left disappointed by the continued lack of progress in Brexit trade talks.

Sterling sentiment soured as the UK’s chief negotiator, David Frost, warned of ‘considerable gaps’ between the two sides, while his EU counterpart Michel Barnier said a deal is still ‘far off’ and negotiating time is fast running out.
At the same time, the euro continued to firm yesterday as EUR sentiment remained underpinned by the EU’s accord on the coronavirus relief fund.

However, this upside in the single currency was tempered somewhat in light of a surprise deterioration in Eurozone consumer sentiment this month.

The US dollar, meanwhile, edged higher on Thursday, with investors beginning to favour the safe-haven currency again in response to renewed tensions between the US and China.

Adding to the ‘Greenback’s appeal were comments from US Treasury Secretary Steven Mnuchin, in which he said the White House is focused on passing another coronavirus stimulus package worth $1 trillion.

What’s coming up?

Turning to today’s session, the pound looks to be off to a solid start after the publication of some robust UK retail sales figures earlier this morning.

Sterling may build on these gains later this morning as well, with the UK’s latest PMI figures expected to show the UK’s private sector returned to growth this month.

The Eurozone will also release its preliminary PMIs for July this morning as well. Will a strong rebound in economic activity in the bloc this month help the euro close out the week on a high?

Finally, the US dollar may be propped up through today’s session, should US-China tensions continue to flare.

Written by
Philip McHugh

Select a topic: