23/07/2020

Transition fears resurface


GBP

The British pound fell yesterday on growing concern that the Brexit transition period will conclude without a deal being reached between the UK and EU. On top of this, the poor economic outlook for the country looks bleak and the UK aims to come out of the virus imposed lockdown.

Britain’s debt levels are rising as we battle away to prevent a possible wave of Covid-19-induced unemployment. Data released earlier this week showed government borrowing hit a record 127.9 billion pounds in the first three months of the financial year. Comments from ministers are not helping the pessimistic tone, with Transport Secretary Grant Shapps being quoted as saying London wants free trade but is prepared for no deal scenario. A further report from the Daily Telegraph fuels the rumours of a breakdown in talks between the two parties before the upcoming July deadline.

USD

The US Federal Reserve is scheduled to hold a two-day policy meeting next week as the Fed looks to provide support to an economy damaged by the lockdown. Expectations are still high on interest rates at near zero.

US coronavirus cases still remain worrying high, President Trump has recently changed his stance and stated its likely the outbreak will get worse before it gets better and appealed to the US public to wear face masks and practise social distancing.

Key announcements

13:30 – USD– US Initial Jobless Claims; expected to remain at 1300K


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