The Pound Sterling recovered in Tuesday trading in London as some improvement in risk appetite had FX traders paring their holdings of safe haven currencies. Analysts point out that trade in Sterling is still cautious, however, as markets focus on the beginning of EU-British negotiations that could yield a favorable trade deal for Britain. The Coronavirus and the implications of a significantly larger outbreak than has been reported is still foremost on traders minds say currency strategists. If the virus is not contained soon, the fears are that global supply chains could be negatively impacted and, as a result, have far reaching and likely damaging outcomes for the global economy.
As of 10:35 am in London, the GBP/USD was trading at $1.2979, a gain of 0.4458% and off the session peak of $1.29962 while the low was recorded at $1.29136. The EUR/GBP was lower at 0.8352 Pence, down 0.4955%; the pair has ranged from a trough of 0.83442 Pence to a high of 0.84060 Pence.
Pound Outlook Remains Questionable
While the Pound is receiving renewed interest given an improving economy and on expectations that the finance minister will follow through on his comments that he intends to increase public spending, there is still the pervading fears that the current policy differences between the British government and the EU leadership will not be favorably addressed. At this point, analysts say that neither side appears to be willing to make any meaningful compromise.