- Pound (GBP) under pressure as the size of the coronavirus hit becomes more apparent. The hospitality sector saw sales plunge 87% in Q2
- Brexit talks continue with little progress, although Michel Barnier is confident a deal can be reached
- US Dollar (USD) rebounds although bounce could be short lived ahead of tomorrow’s Fed decision
- Consumer confidence in focus
The Pound US Dollar (GBP/USD) exchange rate is heading lower on Tuesday, snapping an 8-session winning streak. The pair has rallied over 2.7% across since last Friday 17th July, settling yesterday at US$1.2882.
At 06:15 UTC, GBP/USD trades -0.2% at US$1.2857 after having pierced US$1.29 briefly, a four-month high.
The Pound had little to cheer on Tuesday as Brexit talks continue with little sign of any progress and as the impact of the coronavirus hit to the economy becomes clearer.
Sales in the UK hospitality industry slumped 87% in the second quarter of the year, hit by the coronavirus lockdown. The outlook is also very troubling, according to an industry group. Revenue from April – June totalled just £4.6 million compared to £34.6 billion the same period a year earlier.
Over the course of 2019 the UK Hospitality Tracker said the hospitality industry contributed £133.5 billion to the economy. However, the rolling annual value in June is significantly less at £97.5 billion.
Brexit concerns continue to clinger as talks appear to be going no where fast. The so called level playing field remains a sticking point that he two sides are struggling to overcome. Although EU Chief Negotiator said behind closed doors, that he believes a deal is still possible.
After a weaker start in the Asian session, the US Dollar is finding some strength heading towards the European open in an oversold bounce. Attention remains on the fiscal stimulus package and on the Federal Reserve as the two day meeting begins ahead of tomorrow’s rate decision.
The bounce in the US Dollar could be short lived as concerns surrounding the spread of coronavirus and its threat the US economic recovery are keeping the greenback under pressure. The Fed is also expected to adopt a dovish tone which could also pull on the greenback.
Today investors will look towards US consumer confidence data for further clues of the health of the US economic recovery.