Pound Struggles Continue
25 September, 2020
Sterling is still struggling to make any headway against its major pairings as Covid restrictions tighten and Brexit trade talks still prove fruitless.
We did see the pound make some gains yesterday but these were muted and mainly down to weaker than expected German IFO business sentiment data in the morning, followed by rising jobless claims in the US, with new claims outstripping forecasts by thousands.
Meanwhile, the U.K. was focused on the Chancellor’s new announcements heading in to the winter.
With the furlough scheme ending, but the numbers of new Covid cases increasing daily, the Government has had to change tac from getting people back to the office, to working from home again where possible.
There is concern as to what lies ahead once the furlough scheme ends next month, with the potential for a large swathe of redundancies. In response, Rishi Sunak announces his emergency job scheme where the government will subsidise a third of employee wages for those who are currently able to work a third of their full time hours. The employers will pick up another third, meaning a full time worker effectively is just 22 percent down from full time wages, with the scheme lasting for 6 months. In addition, the hospitality sector will enjoy lower VAT for an extended period.
This all gave Sterling a brief rally but it didn’t last, as rates fell back towards close of trade.
As the week comes to a close, there are a few minor data releases to note, including the U.K. GfK consumer confidence survey, EU money supply figures and the Bank of England quarterly bulletin all ahead of the key US durable goods order figures after lunch.
With volatility likely to remain for the foreseeable, there are various options available to minimise exposure to currency fluctuations. Give one of the team a call today for some friendly guidance regarding your specific requirements and the options available to you.
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