Market Update

The pound rose against overnight and continued to gain in early London trading, after Prime Minister Boris Johnson set out plans to reopen thousands of high street shops, department stores and shopping centres next month.

Johnson said at a news conference on Monday that outdoor markets and car showrooms could reopen from June 1 and all other non-essential retail from June 15 if the government’s tests are met.

Opening up pubs, restaurants and bars after the coronavirus lockdown is difficult, however, and there will be no standing at the bar in pubs for a long time, Cabinet Office Minister Michael Gove said.

The pound is still the worst performing G10 currency this month, with cable having lost 3% since its peak at the end of April.

According to weekly futures data, short positions on the pound have increased for the past eleven weeks straight. The last time the market was this short on the pound was December 2019.

The pound is weighed down by the UK’s high COVID-19 death rate, the fact that the Bank of England is considering negative interest rates, and ongoing Brexit-related risks, as the UK insists it will not seek an extension to the transition period.

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