Currency markets subdued after long weekend for US

Daily Currency Update

GBP - British Pound

With North American markets closed yesterday due to Labour Day, the extended weekend mood was reciprocated across Europe and the UK where there was a relatively quiet start to the week.

Sterling fell yesterday pulling back from its near month highs against the dollar and 7 day peak vs the euro with signs emerging that the economic gains made from post lockdown re-openings may be starting to fade. The pound held firm on Friday after the US jobs announcement, but little has happened for the currency since, with investors likely waiting signals from the UK economy and the Bank of England's next announcement on its future policy direction, due later this month.

Tomorrow sees a hearing, where the Bank of England Governor and several MPC members testify on inflation and the economic outlook before Parliament's Treasury Committee. Any stance deemed to show that the UK's central bank is looking to raise interest rates sooner than expected and taper their asset purchase programme will likely provide Sterling a boost.

In COVID-19 news, the UK reported over 41,000 new cases yesterday and the highest 7 day average since late July which causes some concern with children having just returned back to school. Though hospitalisation numbers appear to remain low, this data is being watched carefully by the market, and any signs of an uptick could see Sterling reverse its recent trend very quickly and fall lower.