The pound managed to rack up modest gains against the euro and US dollar yesterday as the Chancellor’s new ‘Winter Economy Plan’ offered hope that some of the damage created by the conclusion of the government’s furlough scheme would be limited. Even though the gains were small, sterling bulls will take it as a victory given the fact GBPUSD & GBPEUR have fallen 5.5% and 4.2%, respectively, since the beginning of September.
As expected, the Chancellor’s plan included innovative ways in which to support jobs and businesses. Even though there will be a substantial amount of jobs lost at the end of October, once the official furlough scheme ends, these new policies will ensure the damage is greatly reduced. The timing of this announcement, as well as the recently imposed restrictions, has been important given that the UK joined France yesterday in confirming the highest daily total of infections since the pandemic began.
Today’s economic calendar is rather sparse. At lunchtime, we’ll see the Bank of England’s quarterly bulletin released. This will be followed by US durable goods data. Many traders and dealers will also be positioning for next week. A week which will no doubt see developments on the Brexit front with the EU expecting the UK to have withdrawn its intent to potentially break the Withdrawal Agreement should the outcome of negotiations be ‘no-deal’. Essentially, a huge week for the pound coming up – will it be able to handle the pressure?
Have a nice weekend and stay safe.
Written by Viv Savani. 8:12am, September 25th 2020
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8:18am, October 2nd 2020
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