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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.

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

Monday:

UK housing market surges in busiest month in 10 years

Tuesday:

Brexit Talks Resume With Just Seven Weeks Left to Reach a Deal

Brexit trade: uncertainty looms over importers and exporters

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.

Wednesday:

UK Annual consumer price inflation rose to 1.0% in July from 0.6% in June

The headline rate of output inflation for U.K. goods leaving the factory gate was negative 0.9% on the year to July 2020, unchanged from June 2020

UK House Price Index for April 2020: -0.2% m/m

UK hopeful of EU trade deal next month, says No 10

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.

Thursday:

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.

Friday:

Flash UK Manufacturing PMI Aug: 55.3 vs. 53.3 in Jul.

UK Consumer Confidence holds at -27 in August

UK retail sales climb back to pre-pandemic levels

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 dealEU’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.