Global risk appetite improves
Sterling ended the week on a positive as it held firm against the dollar for the first time in four weeks. The pound’s movement in the coming weeks will depend on how talks progress between the UK and the EU in regards to a post-Brexit trade deal, sterling will also be impacted by investor risk appetite.
Brexit talks are set to resume this week but Michel Barnier believes there are ‘serious divergences’ between the two parties and a trade deal is far from being reached. British Prime Minister Boris Johnson said on Friday he was more optimistic than Barnier that a post-Brexit trading deal could be struck, but said Britain could leave the bloc without a comprehensive agreement if needed.
The longer the wait for positive Brexit news is likely to cause the pound to fall lower with uncertainty on the table.
The dollar edged higher on Friday from a sentiment boost from better than expected jobs data but was offset by rising coronavirus cases. This led to the dollar experiencing its biggest weekly fall since the start of June.
After two months of recovery in unemployment, the US economy has regained just over a third of its historic fall of 20.787 million jobs lost in April.
Investors were looking at a potential economic recovery but with cases of Covid-19 continuing to rise in the US, a recovery looks unlikely at current.
USD – 15:00 – ISM non-manufacturing PMI – Forecast at 50 from a previous 45.4
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