The pound is still weak against the dollar this morning and has fallen for five days against the euro. This is due to concerns over the Delta variant and a fall in the global markets – a situation when safe-haven currencies typically benefit, and sterling weakens.
The UK’s chief negotiator, Lord Frost, will explain the government’s latest Brexit proposals in Parliament later. He is expected to warn the EU that the UK will override the Brexit arrangements for Northern Ireland if a more simplified agreement cannot be reached.
In Europe, all eyes will be on the European Central Bank’s press conference tomorrow, which comes after officials announced a change to the Bank’s inflation target earlier this month.
Yesterday, the UK was placed on the US State Department’s ‘do not travel’ list, the highest warning against travel, due to rising COVID-19 cases.
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GBP: Pound still weak as markets fall
The pound has fallen for five days against the euro, mainly due to a drop in the markets, which has been sparked by concerns over the Delta variant. The pound tends to move in tandem with the markets in situations such as this and weakens against ‘safe-haven’ currencies.
There are worries that the Delta variant will hamper the UK’s economy recovery, despite ‘Freedom Day’ occurring at the beginning of this week.
As well as this, two Bank of England MPC members revealed on Monday that they are against tightening monetary policy too quickly. Ben Broadbent, another MPC official, will speak tomorrow.
GBP to USD over past year
EUR: Markets await ECB meeting tomorrow
The euro is strong against the pound but weak against the dollar this morning, mainly due to dollar strength.
However, uncertainty ahead of the European Central Bank’s press conference tomorrow is also weighing on the euro. This is the first-time officials will convene after publishing the findings of their strategic review, in which they changed their inflation target from ‘just below 2%’ to around 2%.
There are expectations that President of the ECB, Christine Lagarde, will take a ‘dovish’ or cautious tone tomorrow, which could weigh on the euro.
USD: Dollar strong due to Delta concerns
The dollar is still benefitting from its status as a ‘safe-haven’ currency due to global concerns about the Delta variant.
It’s at the strongest it has been against the euro since early April and as at its highest point since January against the pound. The Dollar the best performer in the G10 segment of major currencies for 2021.
The UK was placed onto the US State Department’s ‘do not travel list’ on Tuesday, due to surging COVID-19 cases across the country.