Return to daily updates Monday May 18th 2020

Sterling falls on Brexit worries

Headlines

  • Sterling falls on Brexit worries
  • Euro steady versus the dollar
  • US on back foot after strong week

GBP

  • Sterling moved lower on Friday, after the UK and EU traded blows over the post Brexit deal. From Reuters; British chief negotiator David Frost said on Friday the major obstacle to a deal was the EU’s demand to include a set of “novel and unbalanced” proposals on a so-called “level playing field” that would bind Britain to EU rules. The EU’s chief negotiator, Michel Barnier, said the third round of talks was disappointing and that the EU would not “bargain away our values for the benefit of the British economy.” The British economy shrank by a record 5.8% in March and the contraction in the April-June period could approach 25% and lead to the largest annual decline in more than three centuries, the bank of England said.

EUR

  • The euro was steady against the dollar, remaining above the 1.18 level. Concerns for the pound, meant the single currency ended the week well and traded to a low of mid 1.11s. This morning, things remain calm and investors will look to EU negotiations on Brexit and economic data to determine the direction of trade.

USD

  • The dollar was slightly lower this morning after an all conquering week against the pound and a basket of other currencies. Sentiment around the re-opening of economies lifted the so called “riskier” currencies and sent the dafe haven greenback lower. Even the the dollar has performed well, economic data out of the US has been particularly bad with US retail sales out on Friday cementing this. The collapse in retail sales reported by the Commerce Department on Friday added to the historic loss of 20.5 million jobs last month in underscoring the deepening economic slump. Federal Reserve Chair Jerome Powell on Wednesday warned of an “extended period” of weak growth and stagnant incomes. 

Other currency news

  • Commodity currencies started this morning off well as a combination of re-opening economies and lifting restrictions improved sentiment around them. The NZ dollar and AUS dollar were both up this morning against the dollar and other majors. The Chinese yuan struggled however last week over tensions between the US and themselves highlighted investors thoughts.

Amir Mehrad
Market update by Amir Mehrad
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