The Pound Sterling could not maintain momentum after its' days long winning streak against its US rival and European counterpart. The Dollar was able to move higher despite a dire outlook for the economy from the US Federal Reserve Bank, lifted primarily as a safe haven currency after that news spooked FX traders. As Britain continues its movement toward a reopening after some of the restrictions were lifted, traders continue to be wary of the poor outcomes of the Brexit negotiations. The UK government's deadline to request a transition extension is the end of this month, and with a round of negotiations with EU officials that are yielding very little, there is a concern, once again, that Britain will be without a favorable trade agreement at the conclusion of the transition period.
As of 11:03 am trading in London, the GBP/USD was trading at $1.2692, a loss of 0.4111% and off the session trough of $1.26505. The EUR/GBP was higher at 0.8968 Pence, a gain of 0.5066%; the pair has ranged in this session from a low of 0.89146 Pence to a peak of 0.89739 Pence. The GBP/JPY was lower at 135.745 Yen, down 0.583%.
Fed's US Outlook Grim
Currency strategists say that the Dollar does have some broad vulnerability, especially given the repercussions of the Coronavirus and the growing unrest and protests throughout the US. The Fed report suggested that they will continue to need to provide large scale economic and policy support in the form of a near-zero interest rate structure, at least until December 2022. Their analysts also predict that the unemployment rate will settle to around 9.3% by the end of this year and that productivity and growth will result in economic shrinkage of 6.5% at the end of 2021.