Foreign Exchange Update 7th September 2020
GBP/USD recovered from a slight dip below 1.3200 and is currently trading at a spot rate of 1.3227. The pair has been pushed down by a steadying greenback which could keep the Pound on the back foot this week amid ongoing Brexit negotiations which are due to resume. Sentiment in the market remains cautious as an important update from the European Central Bank is closely eyed.
The Euro-to-Dollar stayed within range at a spot rate of 1.1840, following unexpectedly downbeat German data and bullish Eurozone Sentix. Europe’s common currency hit its highest level since early 2018 last Tuesday, but was challenged midweek when ECB chief economist Philip Lane said the EUR/USD rate matters because of its effect on growth and inflation, even though the central bank does not deal with exchange rates.
The Sterling kicked off the new week at a softer rate against the Euro, after having dipped 0.1% the previous week, indicating that the market is starting to strengthen ahead of its next major directional step, expected to come from either key Brexit updates or the ECB’s next policy meeting. GBP/EUR was seeing trading at 1.1182 at the time of writing.
Elsewhere, the Canadian Dollar could push GBP/CAD to below 1.71, as the pair remains vulnerable amid talks of a ‘no deal’ Brexit. The Pound-to-Canadian Dollar is currently trading at 1.7370. A strong performance from the loonie last week made it the best performing major currency, especially as a weak Euro weighed heavily on British exchange rates.