After the pound finished up July as one of the best performing currencies the pound has struggled to make gains against the euro over the last week with fears of a second wave and so much uncertainty surrounding the financial markets.

So, what will affect the Value of GBP?

With very little data that has been released this week to impact the pound all eyes will be on this afternoons Bank of England (BoE) monetary policy meeting. Although there are no changes expected to be made, the Bank of England governor Andrew Bailey said the BoE is actively reviewing the prospect of a negative interest rate policy (NIRP) which could put the pound under more pressure. At the moment it seems the Bank of England will await more news with EU-UK trade talks before implementing such changes however this could still be a concern for the UK with money markets are already pricing in negative interest rates for the start of 2021.

Bank of England Interest rate decision to take centre stage this week

Back in June the Bank of England announced it would add another £100 billion to its bond buying scheme also know as Quantitative easing (QE) this brings the total to £ 745 Billion. This proactive approach shows the government are willing to support the recovery of the economy and could offer sterling some support.

Brexit talks and Covid-19 continue to be the main drivers behind the strength of the currency as investors continue to focus on the corona virus pandemic. 307,251 cases of Covid-19 have been reported with sadly 46,295 deaths. With the numbers of coronavirus cases still high the government will be looking to make any necessary steps towards controlling the pandemic which may mean once again the closure of pubs and other leisurely activities and this could impact the strength of the UK economy. 

For information on how today’s announcement may affect your currency purchase please contact your currency dealer for the latest updates and guidance on how to protect your investment.

USD and Trade Talks

Yesterday US stocks climbed higher as hopes for a US stimulus also climbed higher hoping for more support to the US economy as trade talk discussions began at the beginning of the week. On Tuesday, treasury secretary Steven Mnuchin said there are hopes that the democrats and Mr Donald Trump could reach a deal by the end of the week. However, there may still be disputes on unemployment and insurance expansion Mnuchin insists progress is being made.

Senior officials in China have agreed to meet on August 15th to discuss their “phase one” trade deal this comes six months after the trade deal was agreed. On August 15th, its likely Chinese official will air mutual grievances which is likely to intensify strains between the relationships and could impact the value of the USD.  At the time of writing rates sit comfortably above 1.31.

Under the phase one deal China has pledge to boost us trade deals by $200 billon above 2017 levels, the industries include agricultural, manufacturing plus services and energy however China who is believed to be behind the global pandemic looks to be far behind its paces and unable to reach the first year goal of a $77 billion increase.

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