With a light week of U.K. headlines and economic updates, the British pound was mainly influenced by broad risk sentiment and counter currency flows to a net positive close ahead of the weekend.
United Kingdom Headlines and Economic data
Tuesday:
Strong session for the British pound despite news of Boris Johnson’s plans to resign in 6 months because of lingering coronavirus health problems and the sharp fall in U.K. retail employment (with worse likely to follow).
It’s likely Sterling moved higher on rising broad risk sentiment, sparked on this session by news that U.S. and China reaffirmed the Phase 1 trade deal.
Wednesday:
Central banks can only play ‘modest’ role in tackling coronavirus inequality – BOE Chief Economist
Mixed session for Sterling, but fell only to the Aussie and Kiwi as broad risk sentiment seemed to be the main driver for price action. Traders were once again leaning positive on risk after positive COVID-19 related headlines (Cambridge university aims for autumn trials of coronavirus vaccine after UK funding) and possibly on signs that the pandemic pace is slowing broadly worldwide.
Thursday:
Very choppy session for the British pound as traders battled the continued positive risk on lean (once again on positive COVID-19 related headlines) against news that U.K. Employment fell sharply in the service sector in the three months to August, ultimately ending the session as a net loser.
Friday:
Barnier ‘flabbergasted’ at UK attempt to reopen Brexit specialty food debate
EU Presses U.K. to Reveal State-Aid Plans to Save Brexit Talks
The were no major catalysts from the U.K. to drive Sterling on the session, so the volatile moves in GBP pairs were likely driven mainly by counter currency flows (e.g., yen strength after Japan PM resignation, U.S. dollar weakness ) and broad risk sentiment (trending positive after Powell’s speech on inflation re-targeting).
