- Pound (GBP) rally fades and sterling moves lower amid growing concerns that a Brexit deal is unlikely to be reached
- UK Manufacturing PMI and coronavirus news to offer further clues on direction
- US Dollar (USD) trades broadly flat after encouraging Chinese PMI data and ahead of barrage of US data including ADP private payrolls.
- Pound US Dollar (GBP/USD) exchange rate is trading back below $1.24
The Pound closed +0.8% higher versus the US Dollar on Tuesday at US$1.2401, thanks to a spending blitz by Boris Johnson to boost the UK economy after the coronavirus pandemic.
The Boris bounce was short lived and the Pound is once again sub $1.24, -0.2% at US$1.2377 as investors look ahead to manufacturing PMI data and as Brexit and coronavirus drag on Sterling.
Comments by EU Chief Negotiator Michel Barnier, accusing the UK of making unacceptable demands on financial services show just how far apart the EU and the UK are in negotiations. A post Brexit trade deal continues to look elusive, even as the UK insists that an outline deal should be ready by the end of this month.
Coronavirus news is also acting as a drag as Leicester returns to lockdown to stem the spread of a spike in covid-19 numbers. Looking at the bigger picture, the number of daily deaths is down 10% compared to last week.
Investors will now look ahead to UK manufacturing PMI data which is expected to confirm a slight expansion in activity in June at 50.1 on the index.
The broad mood in the market is mixed, keeping the safe haven US Dollar trading broadly flat versus its major peers as improved economic data is being offset by rising coronavirus cases in the US.
Following from rebounding US homes sales, signs of a rebound in Europe, Chines manufacturing activity gathered steam in June adding to evidence that the economic recovery is gaining traction.
Investors will now look to US data for further clues as to the health of the world’s largest economy. ISM manufacturing and non-manufacturing are expected to show the contraction in the sectors slowing. Meanwhile the ADP Payrolls are expected to show a 3 million increase after a -2.7 million decline in May.
