The Pound Sterling was able to gain positive momentum during London trade on Wednesday but analysts point out that it remains vulnerable given the continuing fallout to the economy from the Coronavirus pandemic. On Tuesday, the government said that it would extend the current job retention scheme through to the end of November; the government provides furloughed workers with about 80% of their wages. What is a concern to experts and traders alike is how the government will be able to fund this plan which is likely to cost billions. The fear, confirmed by a leaked document from the British Treasury, is that there will need to be a marked increase in taxes in order to offset the costs.
The GBP/USD was trading higher at $1.2996, a gain of 0.2495% as of 11:07 am in London; the pair has ranged from a session low of $1.22506 to a peak of $1.23156. The EUR/GBP was lower at 0.8819 Pence, down 0.2568% and off the earlier trough of 0.88073 Pence. The GBP/JPY was higher at 131.643 Yen, a gain of 0.1507%, well off the session peak of 131.849 Yen.
Fed Chair's Speech Could Surprise
In the US, the greenback is trading broadly lower ahead of a speech from the Federal Reserve Bank chairman who, experts say, may introduce the possibility of negative interest rates at a speech he will give later today. Analysts have pointed out that a negative rate environment may be the last tool in the Fed's toolbox, however, they believe that Jerome Powell could be using today's opportunity to speak at an online economics forum as an opportunity to ready the masses for that possibility. The EUR/USD was trading at $1.0852, a gain of 0.0535% while the USD/JPY was lower at 107.0500 Yen, down 0.11%.