- Pound rises against both dollar (0.2%) and euro (0.1%) at spot
- USD sees falls against GBP, EUR and AUD
- Long term outlook for GBP sees negative bets on sterling exceed positive bets in the futures market
Sterling has been boosted by an improvement in global risk appetite that measures to contain coronavirus may start to be eased. The number of new coronavirus cases in Britain has also appeared to slow.
Current GBP to USD rate: 1.2270 USD
Current GBP to EUR rate: 1.1775 EUR
Current EUR to USD rate: 1.0420 USD
Prime Minister Boris Johnson had his first day back at work on Monday having recovered from the coronavirus himself, “We simply cannot spell out now how fast or slow or even when those changes will be made, though clearly the government will be saying much more about this in the coming days,” said Johnson as all eyes are now on the British PM to see what Britain’s plans are to ease lockdown restrictions.
GBP gains on USD and EUR
Against a broadly weaker dollar, cable steadily rallied, although in this case the move higher had been looking likely for a week now. The GBP vs USD rate had formed larger highs and larger lows but the weakness from yesterday’s high at $1.2450 appears to be turning into a fresh push higher, having held $1.24 overnight and currently trading at 1.2498 (Tuesday morning). Moving forward, we could see a test of the $1.2520 area that marked resistance in mid-April. GBP vs EUR rose around 0.1%, which would see 1 euro worth 87.34 pence.
In other news EUR/USD, GBP/USD and AUD/USD all moved higher. AUD/USD in particular was on the rise. Yesterday saw the price push above $0.6440, the high from mid-April, and this positive development has been followed up by further gains.
Long Term Prospects for Pound not so Positive
For its long term prospects, the market turned bearish on the pound. For the first time since December 2019 negative bets on sterling outnumbered positive bets, according to weekly futures data for the week to April 21. This follows after six weeks of investors reducing their sterling long positions too. Concerns remain of the severity of the COVID impact in the UK and its potential implications for a Brexit deal. While the IMF are encouraging an extension to Brexit negotiations, the UK has remained firm in its stance that an agreement can be reached by the end of the year.
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