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Mixed performance for the British pound this week thanks to the usual drivers of Brexit worries, weak U.K. economic updates and further speculation on the Bank of England’s next move. But mainly, the diverging price action was due to  global risk sentiment and counter currency flows.

Overlay of GBP Pairs: 1-Hour Forex Chart
Overlay of GBP Pairs: 1-Hour Forex Chart
GBP Weekly Performance from MarketMilk
GBP Weekly Performance from MarketMilk

United Kingdom Headlines and Economic data

Tuesday:

Brexit talks ‘risk stalemate’ if no progress on key issues

U.K. Retail sales remain depressed, but decline expected to ease

BoE Not Remotely Close to Any Decision on Negative Rates: Haldane

Broad positive risk sentiment (continued  recovery hopes and vaccine development news) was likely the main driver for Sterling’s split performance, rallying against the “safe havens” while under performing against the higher-yielding currencies.

Wednesday:

UK lockdown drives fastest growth in grocery sales for over 25 years

Step up your no-deal Brexit plans, EU tells banks in Britain

The broad, sudden move lower against the safe havens / higher against the high-yieldings during the U.S. trading session was likely on a shift in risk sentiment towards negative, this time possibly on geopolitical tensions rising (e.g., U.S. weighs sanctions on Chinese officials, firms over Hong Kong, China approves controversial national security bill for Hong Kong).

Thursday:

Let’s risk overdoing stimulus for searing COVID hit: BoE’s Saunders

UK economy to struggle to recover from ‘searing’ COVID blow: BoE’s Saunders

BoE’s Saunders on negative rates: we review our toolkit regularly

UK still a long way from agreeing EU trade deal, negotiator says

Strong move higher in Sterling against the majors during the U.S. session (minus the euro and franc) was a bit odd. Against the higher-yielders, it could be attributed to the rise in geopolitical tensions (Riot police deployed in Hong KongChina approves controversial national security bill for Hong Kong), but against USD and JPY, it’s somewhat not clear. Possibly on the recent positive European sentiment after the EU unveils plan to borrow 750 billion euros to aid economic recovery?

Friday:

Accelerated summer Brexit talks needed to secure a deal, EU adviser says