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The Pound has been the best performing major currency so far this week – the recent movement was largely driven by technical trading as opposed to fundamentals supporting the UK currency. This left the pound as the best performing major currency of the day but when you look at the broader picture, the pound remains the worst performing major of 2020 and will struggle to reach higher levels whilst Brexit negotiations remain gridlocked.

On Thursday we await the latest round of EU-UK trade negotiations for signs of progress between the two sides, noting that such a development could prove to be a significant positive for Sterling that could trigger some meaningful gains.


In Europe, the EU is continuing work on their COVID-19 rescue package. European Council President circulated the latest plan yesterday afternoon, totaling €750 billion, €390 billion from grants (a reduction from the originally proposed €500 billion) and €360 billion of low-interest loans. There is a sense of optimism this time round although the northern states have been pushing to reduce the size of the stimulus package and attach more caveats to the loans. If the EU 27 can reach agreement, this could provide the euro with some support and send pound to euro lower although more interestingly this political movement could signify a deeper financial state integration.


The US Dollars has had a painful July so far. Through the first thirteen closed trading days of the month, there have only been three days that have produced gains; today is on pace to mark 11 out of 14 trading days in the red for the greenback.

The dour narrative enveloping the US Dollar has not changed: mounting evidence that the US economy will lag its developed counterparts in economic recover leaves the US Dollar vulnerable position, particularly relative currencies whose economies now flattened their curves; the Euro come to mind.

There is not much date ahead for the remainder of the week and next for the Dollar which gives little reason to think that the terrible July will turn better.

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