Pound Recovers On Improving Outlook

Brexit

After striking 2-week trough in yesterday's trading session, the Pound Sterling recovered ground against the greenback during Tuesday trade in London. Data that wasn't as dismal as expected helped to buoy the currency, as did what appears to be more positive discussions on the Brexit transition. The UK's Statistics Office reported today that the unemployment rate in the UK held at the same level, 3.9%, for the rolling 3-month period through to April; analysts had been predicting a rise to 4.5%. Average earnings for the same period was worse than analysts had predicted. Average earnings including a bonus fell to 1% against an expected fall to 1.4%, while average earnings without a bonus fell to 1.7% against a prediction of 1.9%. In the case of the former, the previous figure was revised downward to 2.3%.

As of 11:14 am in London, the GBP/USD was higher at $1.2656, up 0.3456%, and sliding away from the session peak of $1.26882. The EUR/GBP was lower at 0.8944 Pence, a loss of 0.3421%; the pair has ranged from a low of 0.89421 Pence to a peak of 0.89956 Pence. The GBP/JPY was trading at 135.921 Yen, up 0.3655%.

Markets Focus on Brexit Talks and BoE

The latest Brexit talks seem to have yielded some positive comments from both sides. The British Prime Minister agreed with the EU leadership to step up efforts to improve their relationship. Moreover, Mr. Johnson had said that he believed an agreement might be reached next month. Any progress between the parties will be perceived as positive given that the transition period expires at year's end. Market players are also waiting for confirmation from the Bank of England that they intend to increase their bond purchases to further support the UK economy which is struggling in the wake of the Coronavirus pandemic. The BoE Governor had said that the bank will make every effort to ensure that the threat of long term damage to the economy is minimized.

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