Sterling had a more subdued day on Tuesday

14 October, 2020

Simon Eastman

Sterling had a more subdued day on Tuesday, having made some decent gains across the board on Monday.

The reason for the rally was Boris Johnson’s three-tier strategy for tackling the rising Covid numbers, which was less imposing than markets had been expecting.  Tuesday the rates fell back in most pairings as Brexit talks failed to produce a deal ahead of the conclusion of talks today, with the deadline of October 15th imminent.  The EU summit then begins where members would be able to discuss and agree any deal put on the table. Time is running out and they’re still negotiating.

In addition, comments by Bank of England governor Bailey, who hinted again at the need for negative UK interest rates. He mentioned they were “not there yet” on making the decision but it is one they are discussing.

Taking a back seat was the UK unemployment figure which showed a rise to 4.5 percent from an expected 4.3 percent. The worse than expected figure would have added to the pressure on sterling already felt by Brexit talks.

Aside from the conclusion to the current round of negotiations, we also have a flurry of speeches from European Central Bankers, including from President Lagarde at 9am, plus speeches from US Fed, Bank of Canada and Bank of England members.

Let’s see what all that does to the markets today!

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