09/07 – Pound pressured by Covid politics

09/07 – Pound pressured by Covid politics

• Market Updates •

GBP: Sterling hopes

EUR: Softer on inflation changes

USD: Job numbers remain crucial

Sterling

The politics of Covid-19 weighed heavily on sterling yesterday with a letter in the medical journal The Lancet signed by over 100 scientists and doctors condemned the UK government’s decision to relax restrictions further from July 19th.

Sterling was rescued a tad by the government announcement that those who have received two doses of vaccine will not need to self-isolate if they are returning from foreign travel. Such a move suggests that the government is confident that the rise in cases will not pressure the health system, despite reports of operations already being delayed and cancelled given the increase in beds taken by Covid cases.

This morning’s GDP numbers added to the general sense of weakness in the pound with growth slowing in May.

Euro

Yesterday’s strategy review by the ECB didn’t fall on deaf ears but also hardly set the world alight. The single currency remains guided more by movements in risk at the moment with carry trades being unwound. A speech by Christine Lagarde may add to the negative pressure on the single currency.

USD

Moves in bond and equity markets in the past week have pushed currencies used to fund riskier bets elsewhere higher, aiding the USD and the JPY in recent sessions. With the data calendar light today, we do not expect that to change today although investors are definitely pushing for a higher USD in the coming days.

Elsewhere

Chinese news continues to exacerbate the level of uncertainty in these markets. A crackdown on tech companies listing abroad, a weak manufacturing sentiment number and an increase in bank lending numbers suggest that the recovery in that part of the world is maybe not as secure as it was a couple of months ago.


While the yuan is quite quiet, its pull over regional currencies and the USD remains strong and further negative news will likely see increased greenback strength.

Market rates

Today’s Interbank Rates at 09:03 against sterling. Movement vs yesterday.

Euro€1.163 ↓
US dollar$1.376 ↓
Australian dollar$1.852  ↑
South African randR19.66 ↑
Japanese yen¥151.6 ↑

Have a great day and remember, it’s coming home.

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Adam Baldwin

Adam Baldwin

Adam is part of the Marketing team at Equals Money and oversees content and communications for the business. When he’s not at his computer, you will most likely find him trialling some Dad jokes on unsuspecting audiences in and around central London.