Growing Brexit Worries Send Pound Lower

The Pound Sterling edged lower against both the US Dollar and Euro during London trade on Monday as concerns of a second Covid-19 wave weighed on risk sentiment. FX traders are also experiencing jitters ahead of an upcoming Brexit meeting which will hopefully further the negotiations, at least in terms of the request for an extension to the transition period. Recent negotiations have yielded little positive news and most analysts are not hopeful of a different outcome. Currency strategists believe that the Pound is likely to remain very sensitive to these external risks with a lower corrective path ahead.

As of 10:49 am in London, the GBP/USD was trading lower at $1.2534, a loss of 0.0588%, and off the earlier trough of $1.24539. The EUR/GBP was higher at 0.8976 Pence, up 0.0368%; the pair has ranged from 0.89620 Pence to 0.90252 Pence in today's session. The GBP/JPY was also lower at 134.513 Yen, down 0.1366%.

Labor Data and BoE Policy in Focus

In the week ahead, the Bank of England's policy meeting will be held on Thursday. Analysts are expecting that the decision they make will result in an increase of the BoE's bond-buying scheme, with some estimates that they will raise their stake by £100 million, at a minimum. In the nearer term, the UK's National Statistics Office will be releasing labor data tomorrow. Currently, analysts are forecasting that the unemployment rate will rise to 4.5% from the current 3.9% and that average earnings (with and without bonuses) for the 3-month period through to April will have fallen to 1.3% and 1.8%, respectively.

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