COVID confusion and market uncertainty
7 October, 2020
Yesterday’s trading session saw a small drop for Sterling across the board. Having recovered 2-3% from Septembers lows, the pound is now struggling to break back above key resistance levels against the Euro and US Dollar in particular. A small spike was seen following the latest Construction PMI figures that came in strong at 56.8, up from 54.6 in August. Any gains, however, were sold off very quickly with traders continuing to take great caution ahead of the EU Summit of 15th October.
The UK has again reiterated their desire to have a deal agreed by this date, as any longer than this will not allow them sufficient time for necessary implementations ahead of the December 31st. Progress is reported to have been made yesterday with a deal close to agreement on reciprocal social security rights for citizens, a positive step for many who this will affect, however more contentious issues remain to be agreed on if an overall deal is to be finalised in the next 16 days. If a deal is believed to be reachable then further ‘tunnel’ negotiations will begin to tie up remaining details by end of October or mid-November at the latest.
COVID confusion and market uncertainty remains a key element for exchange rates over the coming weeks and months, and as such the pounds future is far from reliant on just the Brexit negotiations alone. Whilst Bojo seems to be losing his Mojo, across the pond Trump has seemingly rediscovered his as he declared to Americans’ yesterday ‘do not be afraid of COVID’. Intriguing and somewhat controversial rhetoric when compared to that of the mainstream media. No-one knows whether another national lockdown will pursue in the coming weeks or not, and so this huge unpredictable variable remains a constant concern to currency markets. For guidance on how best to navigate these difficult markets, contact your currency consultant today to discuss the range of tools we have available to manage your risk.
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