- Posted by currencies in Bank of England, Brexit, Rate Cuts, UK, Uncategorised
- June 1, 2020
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The pound rose against a broadly weaker dollar in early this morning as Britain eased some lockdown restrictions, but the market’s net short position on sterling is the largest in more than five months.
New rules designed to ease the lockdown in England came into force today, even though scientists warned that, in the absence of a functioning system to track new outbreaks, the move was risky.
The new rules do not apply to Wales, Scotland and Northern Ireland.
A fourth round of trade talks on relations with the European Union following Britain’s departure from the bloc will start this week. Britain has until July 1 to ask for an extension to the current transition period which is due to end in December.
The pound is being weighed down by a number of factors: Britain’s high COVID-19 death rate, a lack of progress in Brexit negotiations, a bleak economic outlook, and the Bank of England (BoE) considering negative interest rates
We expect the pound to continue to trade at weaker levels in the near-term unless there is a surprise breakthrough in Brexit talks and/or the BoE clearly rules out negative rates after completing their ongoing review of policy options.