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Market Update

• Posted by currencies in Brexit, coronavirus, Sterling, UK, Uncategorised
• July 3, 2020
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Sterling was headed for its first positive week in four against the dollar, holding close to the $1.25 mark as a week of negotiations between Britain and the European Union ended on what investors called an optimistic note, with meetings expected to resume next week.

Brexit talks this week between Britain and the EU ended early on Thursday, with a meeting between the chief negotiators on Friday cancelled.

The EU’s chief negotiator, Michel Barnier said serious divergences remained between the two sides after talks this week on their future relationship. He also said in a statement that the EU continued to believe that an agreement was possible and in everyone’s interest, but its key demands for an economic partnership were unchanged.

Ahead of a new round of talks next week, the two parties have reportedly softened their stances on a few issues and took steps towards a general compromise.

The next 3 months are likely to see the pound subject to heightened Brexit headline risks and it is not unusual to see FX markets tentatively price in some premium for future expected volatility.