Sterling recovers from recent political tensions
So politics is once again back on the market's radar, as tensions have increased this week between the EU & UK. Whilst an actual trade war is unlikely, investors don't like to see political spats and many had moved bearish on the £ over the last couple of days.
The EU has threatened tariffs on the UK over its resistance to fully implement the Northern Ireland protocol (a key area of the withdrawal agreement). A meeting held in London yesterday ended without progress and the UK has until June 30th to implement or risk tariffs. The UK has suspended elements of the NI protocol to ensure the flow of foodstuffs from the UK to NI and are wanting an agreement in place before July 1st.
GDP data for the UK came out more or less in line with estimates and grows for the third month in a row. In general terms, the Pound is being tipped to ride through this period of political and covid uncertainty and has recovered 0.5% from since Wednesday. Sterling actually looks likely to finish the week up slightly against a basket of currencies and so all eyes on the PM next week who should be delivering a speech on whether restrictions will be lifted on June 21st or not.