Sterling Dips On Covid & Brexit Woes
Sterling was unable to make any headway following the latest GDP data with the weaker than expected industrial and construction data hampering confidence. There were also concerns that momentum in the economy would slow, lessening the potential for policy tightening by the Bank of England alongside covid and Brexit woes.
Overall risk conditions were slightly less constructive during the day with UK equities also losing some ground which in turn curbed Sterling support.
In the Eurozone, industrial production fell by 0.3% in June, the increase in demand for inputs combined with a lack of supply continues to drag on output. However, there are discrepancies within the Euro-area economies, with Germany (-1.0%), underperforming against France (+0.4) and Italy (+1.0%).
Yesterday’s softer tone to sterling is reflected by GBP/EUR changing hands around the 1.1764 at today’s market open. Elsewhere, GBP/USD starts at the $1.38 mark, and EUR/USD is below the midpoint of 1.17-1.18, essentially back to where it was 24 hours ago.
As we look ahead to today, there is a relatively quiet data schedule. The first reading of US consumer confidence is the only release of note. Without any major surprises, fairly sideways trading is to be expected across the major currencies as we close the week.