Pound hampered by low-risk appetite

GBP

In the absence of fresh UK economic data, the market focussed on Dominic Cummings’ sustained attack on the government’s covid reaction in his testimony to the House of Commons. Despite strong criticisms of Boris Johnson and Health Secretary Matt Hancock, the market seemed to assume there would be no immediate staffing changes.

The Pound edged higher until the US markets opened and a slightly more fragile tone surrounding risk appetite hampered progress. Sterling fell short of another attack on the 1.4200 level to the Dollar and dipped back below 1.4150. The Pound  dipped lower again versus the Dollar into the 4pm London fix with suspected month-end selling and the Euro retreated from highs above 1.1560.

Sterling dipped below 1.4100 to the Dollar overnight before opening this morning slightly higher with the Euro opening near 1.1575.

 

USD

Overall risk conditions were slightly less confident which curbed the potential for further short-term dollar selling with the US currency recovering from 4-month lows and the Euro drifted lower after again failing to hold above the 1.2250 level. He added that the central bank may need more communication about what substantial progress means and does not expect will sustain a move above 2%.

 

EUR

The Euro held a firm tone on Wednesday but was unable to extend gains with the US Dollar recovering some territory ahead of the New York open. There were further expectations of recovery in the Euro-zone economy which provided underlying Euro support, especially with an easing of coronavirus restrictions. Markets were monitoring ECB rhetoric closely for any evidence of whether opposition to Euro gains would increase.

As of writing, the Euro currently trades around the 1.2195 mark against its US counterpart. 

 

Data to watch

13:30 – USD – Prelim GDP

13:30 – USD – Unemployment Claims 

15:00 – USD – Pending Home Sales