The British pound is the biggest loser on the week, hit by weak U.K. employment data, expanding stimulus from the Bank of England, and continued Brexit uncertainty.
United Kingdom Headlines and Economic data
Volatility picked up quickly during the Asia session, possibly on global risk-off sentiment thanks to rising coronavirus cases headlines (Beijing Locks Down Part of City After Virus Outbreak at Market) and weaker-than-expected Chinese data. This was likely the main driver for Sterling’s mixed performance, higher against the comdolls and lower against the safe havens.
Employment falls 600,000 since lockdown as UK faces ‘biggest jobs crisis in at least 25 years – This seems to be the turning point that marked the highs for the week in Sterling, and it was likely that the pick up in risk aversion sentiment during the U.S. session was a bearish factor, sparked by Fed Chair Powell’s testimony that the Fed will not be aggressive with corporate bond buying and that the economy faces “significant uncertainty” on a recovery.
Bank of England extends QE by £100 billion – There was no hope for a Sterling recovery after this event. This move was expected of the BOE, but it looks like traders just needed confirmation before taking the British pound lower all the way into the weekend.
Global risk sentiment flipped back to negative during the U.S. session to likely add pressure to the British pound, likely a reaction to weaker-than-expected U.S. unemployment data and rising coronavirus cases headlines.
Despite the rebound in UK retail sales and consumer confidence, it was a down day for the British pound. It was possibly a continuation of Thursday’s BOE catalyst and another round of risk-off sentiment, this time sparked by rising coronavirus cases and news that Apple will close some stores again in states that are seeing a resurgence of Covid-19 cases.