Daily Currency Update
GBP - British PoundThursday morning saw focus mainly on the US dollar and euro, leaving sterling to hold on to the UK's latest Covid numbers for any direction on what it will do next. After two months of soaring Covid-19 cases, peaking at 54,674 on July 17th, numbers have been falling quite dramatically, with just over 20,000 cases reported on Tuesday. This had been quite positive for the pound, providing support versus the euro and the US dollar, however yesterday, we started to see a climb in case numbers again. Markets remain cautious about the impact of Coronavirus on case numbers and the UK economy, as the effect of lifting all restrictions in England on July 19th are yet to be felt. Sajid Javid, UK Health Secretary, also added to the uncertainty with comments yesterday that “no one really knows” what trajectory the Covid pandemic will take in the weeks ahead. New cases across the UK rose after seven days of consecutive declines.
Key Movers
All eyes were on the US Central Bank on Wednesday evening, as they released their latest decision on interest rates and monetary policy. The most expected part of the announcement was the interest rate, with the Fed Funds Rate kept near zero. However, it was their comments that caused some surprise and pushed the US dollar weaker.The Federal Reserve maintained its long term stance that inflation remained a transitory issue, and saying that it would pass over time as the economy normalised and supply chain issues were resolved. It also commented that though jobs growth and economy are strengthening, "risks to the economic outlook remain". It also commented that it would continue to monitor economic progress before easing pandemic support. The US Central Bank remains concerned that increasing interest rates too early will push up borrowing costs for businesses and consumers, which will reduce the ability for people to spend and businesses to grow. This naturally drove the US dollar weaker, having been buoyed in recent weeks on speculation that interest rates may be raised sooner than expected in the US.
Expected Ranges
- GBP/EUR: 1.1710 - 1.1785 ▲
- GBP/USD: 1.3885 - 1.4000 ▲
- EUR/USD: 1.1840 - 1.1900 ▲
- GBP/AUD: 1.8800 - 1.8965 ▲