FED remains dovish but prepared to act when needed

Daily Currency Update

The UK’s economic calendar was clear on Wednesday so GBP was at the mercy of developments elsewhere. This actually played into Sterling’s hand as the quid held onto the gains made against most pairs in the days previous trade. All eyes were firmly on the FED rate statement out of the US. Prior to the 7pm announcement GBP/USD made a charge for 1.30, its highest level since early March, however following the FED statement there was some retraction and the pair has come to rest at 1.2980.
In the one release we did have it didn’t make pleasant reading. The number of cars built in the UK over the past six months has slumped to the lowest since 1954, down 42% on the same period last year. The trade body estimated that 11,349 jobs were lost in the past six months at carmakers and companies which supply them with parts and services. In an effort to combat small businesses from collapsing it’s been widely reported over the last 24 hours that the Government is expanding its COVID-19 rescue loan scheme, a move which some believe has come too late.
While Sterling has enjoyed a brief upturn of late, our broader view remains bearish as Brexit uncertainty and questions over the economies ability to rebound after the Pandemic weigh on the currency.