20 Jul


Sterling news over the weekend has been limited to PM Johnson’s comments over another lockdown being used as a nuclear deterrent. With Brexit talks restarting this week and two Bank of England policymakers giving testimony tonight to the Treasury Select Committee, we only wish the working week would be as quiet.

So far this morning, sterling seems to be reacting to a poll by Deloitte stating that 49% of big UK companies surveyed think it will take until the 2nd half of next year before business recovers to pre-pandemic levels.

The positive news from Brussels is also helping support risk this morning and is allowing GBPUSD to stay in the 1.25s.


Noises from Europe over the weekend suggest that policymakers are close to agreeing a recovery fund for the region although as I type this there has not been any “white smoke” from Brussels. EU leaders are set to meet again at around 4pm for further discussions but we have to expect leaks through the session given the main question of how much of any package will be made up by grants and not loans has yet to be answered.

The single currency has taken the news positively and is trading at its highest level since early March this morning against the USD and has pushed higher across the board.

This can all fall over, and we may be getting to a point wherein the single currency finds itself overextended in the coming days.

US Dollar

Risk continues to hurdle the obstacles put in front of it and hence the USD’s inability to bounce back from yet another week of poor performance. If the optics of the euro is solidarity, agreement, stimulus and progress and the US’s is of 140,000 Covid-19 deaths and a President bemoaning ‘fake’ polls that show him behind in the polls then there is no surprise that EURUSD has moved to a 4 month high.

Increased pandemic measures in places like Hong Kong and Melbourne will always give the USD a shot in the arm on haven demand but we need to see either a sizeable collapse in risk dynamics or a profound positive change in the US labour market for the dollar to make a meaningful move higher we think.


Wider risk has yet to buy fully into the EU recovery fund story with the CHF being an outlier. We think that a positive agreement that is put into place could push EURCHF as high as 1.10 over the next 3 months.

Have a great day.

* The email will not be published on the website.