Boris, Biden and Brexit back on the menu

By Matthew Boyle

Yesterday saw some choppy trading conditions in the FX market with GBP dropping versus both the EUR and USD in the morning before recovering and returning to the recent higher levels during the afternoon.

Speculation of a frosty reception for Boris Johnson by President Joe Biden in Cornwall for the G7 summit circulated ahead of his arrival yesterday. The first official face to face meeting of the Prime Minister and US President will continue to be closely monitored as their views on whether Britain should have remained in the EU sit at polar opposite – Biden a firm supporter of remaining in the EU and Johnson the leading architect of the pro-Brexit campaign ahead of the 2016 referendum.

5 years later and in a post-EU Britain our Prime Minister now faces the challenge of favouring opinion from a US President both disparaging of his characteristics (likened to those of Donald Trump by Biden himself) and laser focused on ensuring that the Good Friday agreement is not derailed in any way.

US inflation data was released yesterday afternoon better than expected which actually led to some USD weakness as it reignites some risk appetite in the markets. This highlights two points, importantly that FX markets often move in a way that is counter intuitive and that the recent range bound market is likely a result of risk aversion, something to watch as we start to see economic recovery from Covid around the globe. Please keep in touch with your A Place in the Sun Currency account manager for important updates.