Sterling trades at 6-week low

Hi everyone,

Last week the Pound suffered its worst week in 2-months, falling 2% across the board. Firstly, it was confirmed that the EU-UK trade talks had hit a deadlock with UK's chief negotiator David Frost suggesting the EU were making "novel and unbalanced proposals on the so-called level playing field". The main obstacle is still the EU's insistence of wanting the UK to adhere to EU law and standards, something that the UK have categorically confirmed will not be agreed. The current stalemate have increased odds of a no-deal Brexit and therefore the Pound has fallen.

Secondly, it looks as if the BoE are considering cutting rates further and into negative territory. BoE's chief economist Andy Haldane has said that further easing measures may be required to alleviate the economic slump caused by the coronavirus. The current rate of 0.1% is a record low, but seeing as the ECB and BoJ are already in negative territory, it makes the path easier for the UK to follow suit. Low interest rates are bad for the UK, as we rely on providing attractive financial assets to foreign investors. 

Sterling is in the green today, bouncing back slightly from the loss seen last week. However, there is significant UK data out this week that could weigh heavy on the Pound pushing it straight back down. 




Upcoming Data


Tuesday, 19th May, 2020

06:00 UK - Employment change & average earnings
09:00 EU - Euro-Zone & German economic sentiment 

12:30 US - Building permits & housing starts
14:00 US - Fed Chair Powell testimony 

Wednesday, 20th May, 2020

06:00 UK - Inflation rate 
08:00 US - ECB meeting 

09:00 EU - Inflation rate
11:00 US - Mortgage applications
14:00 EU - Consumer confidence 
18:00 US - FOMC minutes

Thursday, 21st May, 2020

08:30 UK - PMI
12:30 US - Initial & continuing jobless claims
13:45 US - PMI
14:00 US - Existing home sales
18:30 US - Fed Chaor Powell speech

Friday, 22nd May, 2020

06:00 UK - Retail sales & public borrowing
07:30 EU - German PMI
08:00 EU - PMI
11:30 EU - ECB policy meeting



Ian Daly
Trading Floor Manger



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