GBP/USD retreats from $1.39 amidst reopening jitters

Philip McHugh June 29th 2021 - 2 minute read

The pound’s attempts to rally proved short lived on Monday, with domestic coronavirus concerns quickly stifling GBP demand.

Sterling remains mostly muted so far this morning, with GBP/EUR flat at €1.1636 and GBP/USD subdued at $1.3862. GBP/CAD rangebound at C$1.7126, while GBP/AUD and GBP/NZD tick up to AU$1.8368 and NZ$1.9759 respectively.

Coming up, will a slowing of German inflation drive the euro lower later this afternoon?

What’s been happening?

The pound initially opened this week’s session on some strong footing, supported by the easing of Brexit tensions between the UK and EU.

But Sterling wasn’t able to sustain this upside for long, with GBP exchange rates faltering by the afternoon as investors grew sceptical that the 19 July reopening will go ahead, despite assurances from new UK Health Secretary Sajid Javid.

The US dollar, meanwhile, made some modest gains on Monday, with demand for the safe-haven currency being supported by a worrying rise in coronavirus cases throughout Asia and Africa.

The spread of the more transmissible Delta variant has forced some countries to reintroduce restrictions, undermining optimism over the global economic recovery and boosting the appeal of assets like the US dollar.

At the same time, the euro traded mostly sideways through yesterday’s European trading session, in the absence of any notable EUR economic releases.

What’s coming up?

Looking ahead, the euro is likely to be the centre of attention today, in light of Germany’s consumer price index and a speech from European Central Bank (ECB) President Christine Lagarde.

First up will be Germany’s CPI release, which could place some pressure on EUR exchange rates this afternoon if inflation began to slow again in June.

In addition, a potentially dovish speech from Lagarde later in the day could also weigh on the euro.

Amidst ongoing concerns over the rise of global coronavirus cases we may see investors continue to favour the safe-haven US dollar today.

Meanwhile, any upside in the pound may remain limited today as traders remain focused on UK coronavirus statistics.

Written by
Philip McHugh

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