Sterling recovers following talk of easing lockdown restrictions

Daily Currency Update

GBP - British PoundSterling remained under pressure through Friday trading after the Bank of England announced its intent to increase its bond-buying program by £100 billion. The news saw GBP/USD fall bellow the 1.24 handle before finding support around 1.2335 following the announcement that UK retail sales numbers, for May, came in at +12%, much higher than the +6.3% expected. The news, in line with Bank of England chief economist Andy Haldane's comments the previous day, highlights the recovery in UK demand and output is occurring sooner and materially faster than had been expected. Overnight Asia pacific trading has now seen sterling gain back most of its losses due to the weekend government announcement that the 2m social distancing measure review will be brought forward. If we therefore continue to see improvements in UK data and if the UK avoids a second wave following the easing of social distancing measures, the reopening of shops and now even pubs / bars, the great British pound could rise in the longer term. UK data is relatively thin on the ground this week so focus will turn to US and Euro area PMI's tomorrow plus Thursday’s US Jobless claims, durable goods orders and annualised GDP numbers. All will have a knock on effect to global risk sentiment.