Sterling awaits June 21st decision
Volatility remained low yesterday morning and Sterling drifted. Andy Haldane, the Bank of England’s Chief Economist stated that the housing market was not just overheated but on fire. He also expressed concern over uncertainty in the labour market considering the 3 million people still on furlough. The rapid spread of the Delta coronavirus variant hampered Sterling’s progress, as it led to firmer expectations that there would be a delay to a further easing of restrictions in England on June 21st.
Speculation that President Biden could warn that failure to uphold the agreement could have negative implications for US-UK trade talks added to concerns over the trade situation. Sterling found support above 1.4100 against the dollar and settled close to 1.4150 while the Euro strengthened to highs near 1.1590 before a retreat to 1.1614. Sterling opens this morning just above 1.4150 to the Dollar and the Euro close to 1.1630.
There was further caution ahead of the US consumer prices data and ECB decision on Thursday with markets also waiting for next week’s Federal Reserve policy decision. Overall currency market volatility declined to the lowest level since February 2020. Narrow ranges continued to prevail on Wednesday with the Dollar trading around 1.2180.
The sluggish movement in the US Dollar is keeping the Euro on the higher side with trading favouring the single currency overnight. The pair stays pretty consolidated with movement still occurring below the 1.2200 mark.
There are no high-impact data releases featuring today with the single currency likely to extend its sideways grind ahead of the European Central Bank’s policy announcement on Thursday.
Data to watch
15:30 – USD – Crude Oil Inventories
18:01 – USD – 10-y Bond Auction