Sterling climbs to 2-week high against Dollar

 

Hi everyone,

Last week saw some respite for Sterling and it begins this week in the green, up 0.5% against most currencies. The gains today come amidst a rally in global stock markets. £-$ rates have notably moved to a 2-week high, as the Dollar weakens from the positive stock movements. 

Unfortunately, this looks to be a short preview of Sterling strength, as the UK faces a raft of obstacles. There is a sense of calm in the financial market, as countries start to re-open for business and so the UK's other huge hurdle (Brexit) becomes the main market driver.

The UK has until the end of June to request an extension to talks with the EU and with only one final round of negotiations remaining, it's looking unlikely. The Pound will not be able to gain any significant ground in June, unless an extension is agreed. Should negotiators strike an extension deal, Sterling will rally. If not, the Pound may fall to low levels.

We also face an increasing chance of seeing negative interest rates in the UK, something that will be seen very unfavourably on the market. The UK relies heavily on foreign money coming into the country and with negative rates, investors will look elsewhere for better returns. This scenario will probably cause immediate Sterling weakness by around 2%. 

This week on the data-front, sees the Euro-Zone countries announce many important figures that will move the Euro on release. We are also awaiting news of the EU's recovery fund, that will undoubtedly be a market-mover. Whilst the overwhelming majority of analysts see only Sterling weakness in the near-term, this week could see a resilient £ and therefore a good time to exchange.

 

 

 

Upcoming Data

 

Wednesday, 27th May, 2020


06:45 EU - French business & consumer confidence
07:30 EU - ECB President Lagarde conference 
11:00 US - Mortgage applications 
18:00 US - FED releases beige book


Thursday, 28th May, 2020


07:00 EU - Spanish retail sales & inflation rate
08:00 EU - Italian business & consumer confidence
09:00 EU - Euro-Zone business & consumer confidence
09:00 EU - Euro-zone economic & industrial sentiment

10:00 EU - French job-seeker claims
10:30 EU - Spanish business confidence
12:00 EU - German inflation rate
12:30 US - GDP, durable goods & initial jobless claims 

14:00 US - Pending home sales




Friday, 29th May, 2020

 
06:00 EU - German retail sales
06:00 UK - Nationwide house prices
06:45 EU - French inflation rate
08:00 EU - Italian GDP
09:00 EU - Euro-Zone & Italian inflation rate
10:00 EU - Portuguese GDP
12:30 US - Personal income/spending & trade balance
15:00 US - FED chair Powell speech


  

 
 
 


Ian Daly
Trading Floor Manager

 
 
 


 

 
 
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