Sterling Flat As Trading Volumes Fall
Sterling continues to be confined to relatively narrow ranges with a lack of fresh incentives, low trading volumes and overall global risk conditions zapping any moves in most, if not all major pairs.
There were further reservations over the increase in UK coronavirus cases which posted the highest daily rate for over a month. There were also reservations over the medium-term upward pressure on government spending if booster jabs are required.
In level terms, GBP/USD was unable to hold above 1.3750 against the dollar and retreated to 1.3700 towards the European close while GBP/EUR found support close to the 1.1660. The EUR/USD dropped off before picking back up overnight to trade at similar levels around the 1.1765 mark.
Position adjustment is likely to have an impact on Friday ahead of the US holiday on Monday and there is also the potential for month-end adjustment in Sterling holdings.
Elsewhere, the Australian dollar fetched $0.7243, little changed after data showing Australian retail sales plunged in July due to the spread of the Delta variant. The New Zealand dollar also dipped slightly after Prime Minister Jacinda Ardern announced the lockdown in Auckland, the country’s biggest city, is likely to remain in place for further two weeks.