Weekly Briefing 04/08/20

Good Morning,

• Sterling traded in a narrow range yesterday and held steady against both the dollar and the euro. It was a day of two halves driven by two news reports.
• In the morning session, sterling came under pressure after weekend newspaper reports that the Government would be prepared to lockdown London if there was a resurgence of COVID-19 in the metropolis.
• In the afternoon, Reuters reported that a diplomatic source had told them the European Union may be willing to compromise by softening its demand that Britain heeds EU rules on state aid. On the back of this news, sterling recovered its poise to close at 1.3075 against the dollar and 1.1105 against the euro.
• Sentiment remains positive towards sterling and with no data releases scheduled the market will be more sensitive to news headlines than normal. As there are no Brexit talks on the agenda until August 17th the pound’s direction will be driven by updates regarding the UK-US and UK-Japan trade negotiations as well as any breaking pandemic news.