Despite a good retail sales data in the UK, the Pound Sterling has lost 1.24 in the Forex market. Having dropped the 1.25 barrier, the next reliable support is at 1.2075.
UK retail sales rose to 12%, after collapsing to -18% last month. This is encouraging for the economy, although its currency has not taken it well.
Although the UK is no longer a member of the European Union, eyes will be on today’s summit, as it will result in agreements for the Eurozone, the UK’s main trading partners.
Forex Market: Dollar Takes a Hit from Possible Coronavirus Bounce
Forex: Sterling Falls to 1.2360
The British pound fell below $1.24 today, due to a large amount of macro data, where investors shifted their attention from a rebound in retail sales, to the coronavirus-driven rise in UK government debt.
The UK’s public sector finances for May show how high the cost of the pandemic has been in the first two months of the fiscal year, said Kit Juckes, head of global Bitcoin Era strategy at Societe Generale.
„We still believe that the EUR/GBP will probably trade most of the next few months above 0.90,“ Societe Generale said in a note.
The central bank also kept its benchmark interest rate at 0.1% yesterday, while government bond purchases totaling £745 billion are expected.
Risks related to the Brexit also continued to weigh on the pound. British Prime Minister Boris Johnson told French President Emmanuel Macron on Thursday that talks on a post-Brexit deal cannot be extended until the autumn, Reuters reported.
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The data of the day: European Union Summit
A summit will be held throughout the day in the European Union, where strategies will be defined to continue addressing the ravages of the Coronavirus in the region.
The head of the European Central Bank, Christine Lagarde, told EU leaders that its economy was in a „dramatic decline“ and called on the bloc to act to lead the renaissance, diplomatic sources and officials said.
Sweden, Denmark, Austria and the Netherlands, the bloc’s so-called „four frugals“, say the proposed recovery fund is too large and that the allocation of money is not sufficiently linked to the pandemic.
Hopes for a breakthrough in the recovery fund have been managed down recently, and signs point to an agreement not before an as yet unscheduled summit meeting in July, Deutsche Banks analysts told clients in their morning note.
French European Affairs Minister Amelie de Montchalin said she could not rule out the Brexit talks ending without an agreement, adding that it was still in Britain’s interest to reach one.
Even if we do not see a „second wave“, a renewed increase in the number of infections illustrates that things will not return to normal for a long time, Commerzbank analysts argued.
Finally, in this context, the Pound is falling in the Forex market, and we have to wait for the official document of the summit, which will be released later today. The EURUSD also rose 0.2% to 1.1218.