The Pound Sterling came under pressure against the US Dollar on revived strength for the greenback and a market focus back toward the discussion of a negative rate environment in Britain. Yesterday, the Chief Economist for the Bank of England tried to dismiss the BoE’s so-called review of the matter. However, currency strategists believe that the majority of market players have focused on this possibility, and without a clear and firm disavowal from the BoE, as they have done in the past, then sentiment will continue to shift. Speculation, said one researcher, would not be reversed merely on Andy Haldane’s comments.
Trading in London as of 11:19 am showed the GBP/USD lower at $1.2324, down 0.0665% and off the session low of $1.22803. The EUR/GBP was higher at 0.8938 Pence, a gain of 0.4653%; the pair has ranged from a trough of 0.88885 Pence to a peak of 0.89439 Pence. The GBP/JPY was higher at 132.73 Yen, up 0.1109%.
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The Pound is also being weighed down by the increasingly high number of deaths that have been attributed to Covid-19, as well as the growing government debt burden which is rising as a result of the lockdown measures implemented by the government. The Financial Times reported that sovereign debt by 2024 is likely to be the equivalent of 5% of GDP. Yesterday, the release of a trades survey which showed trends in UK retailers and wholesalers provided evidence of the degradation of the sectors with a reading of -50 which was only a slight improvement from April’s historic low of -55.