Volatility picked up for Sterling this week but price action remained choppy as traders moved back and forth between Brexit headlines, counter currency flows, and improving UK data.
United Kingdom Headlines and Economic data
Sterling was a broad gainer on the session without a clear catalyst for the move, given the negative leaning Brexit theme at the time. It’s likely this may have been by U.S. dollar weakness, driven by rising uncertainty with the new U.S. stimulus bill (Treasury Secretary Mnuchin says Democrats are unwilling to strike a ‘reasonable’ relief deal) and as the U.S. warns colleges to divest Chinese stocks.
A broad turn lower on the session for the British pound, possibly driven by a mix of factors including the net negative U.K. economic updates above, as well as broad U.S. dollar strength.
No major headlines or economic updates from the U.K. on the session, so it’s likely the broad rally in the British pound starting in the London session is possibly on U.S. dollar weakness, correlating with the disappointing update on U.S. initial jobless claims.
A big move lower for the pound on the session on both despite improving business sentiment from the U.K. It’s likely Sterling’s move lower was driven by Brexit headlines (EU, Britain trade blame after scant progress towards post-Brexit deal, EU’s Barnier says little progress in latest talks with UK) and a hint of negative risk sentiment driven by disappointing business sentiment updates out from Europe.