The pound faced another “rangebound” day against the euro yesterday after Brexit talks came to a halt. The beginning of the week saw Prime Minister Boris Johnson reveal that he was hopeful a deal could be put in place by the end of July. But lack of news from the ongoing talks has meant no-deal fears are still on the periphery.
George Vessey, UK Currency Strategist for Western Union Business Solutions said the pound struggled because of concerns over the UK leaving the EU bloc without a deal.
“The British pound failed to capitalise on yesterday’s move higher as a result of easing concerns about a no-deal Brexit, with both the UK and the European Union agreeing to intensify post-Brexit talks.
“The UK Prime Minister Boris Johnson added to the latest optimism and said that an outline of a deal could be reached by the end of July.
“Britain’s jobless rate unexpectedly held at 3.9 percent over the three months to April as firms turned to the government’s job retention scheme to keep employees on their books during a record slump in economic output because of the coronavirus lockdown.
“The pound, however, weakened against the dollar, giving up gains earlier in the day, as the dollar strengthened after the United States reported a record increase in retail sales in May after two straight months of declines.
“The pound has lost almost two percent against the dollar this month but remains close to 10 percent higher from March’s historic lows.”
Mr Vessey also said that the GBP is likely to remain in a limited range.
He added: “Sterling’s upside is likely to remain limited as investors might refrain from placing any aggressive bets ahead of the latest monetary policy update by the Bank of England (BOE) on Thursday.
“The BOE is expected to keep the benchmark rate unchanged at 0.1 percent but it is expected to announce a fresh increase of at least £100billion in its bond-buying firepower.
“BOE Governor Andrew Bailey said the UK central bank had to be ready to do more to help the economy because of the risk of long-term damage caused by the coronavirus lockdown.”
The BoE’s announcement could either trigger huge gains for the pound or see it plummet against the euro.
The pound to euro exchange rate has fallen from a week high of 1.1219 to just 1.1151.
#Multiple #Language #Support