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Market Update

• Posted by currencies in Bank of England, Brexit, coronavirus, Sterling, UK, Uncategorised
• July 24, 2020
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The pound slipped this morning and data pointing to a recovery in British retail sales did little to support it, as investors focused on the lack of progress in trade talks with the European Union.

Retail sales recovered to almost pre-lockdown measures in June, with sales volumes exceeding all forecasts in a poll of economists.

A survey measuring employers’ confidence in hiring and investing also rose, turning positive for the first time since February.

However, the pound remained subdued. It slipped slightly against a broadly weaker dollar and at $1.2731 was still well below its pre-coronavirus levels.

Sterling has fallen against the euro every day since Tuesday, after an agreement on a massive European stimulus plan saw the single currency surge to its highest since October 2018.

Speaking after this week’s round of Brexit negotiations in London, the EU’s chief Brexit negotiator, Michel Barnier, said that reaching a new trade deal was “unlikely” as the UK had shown no willingness to break the deadlock.

Despite a lack of progress, market participants are still assuming a last minute trade deal will be reached later this year when the alternative is to impose another self-inflicted shock onto the UK and European economies which are still reeling from the unprecedented COVID-related disruption.

Britain has the highest COVID-19 death toll in Europe, and Bank of England policymaker Jonathan Haskel warned that the country’s economic recovery from coronavirus would depend heavily on people not being too nervous to go out.