By Matthew Vassallo
Investors have had little to go on over recent days, as GBP continues to remain rangebound against both the EUR & USD. Whilst optimists will cite the Pound’s ability to withstand any significant downturns below the current support levels, those with a glass half full viewpoint will look at its inability to gain the necessary market support to push it back towards the mid-summer highs.
It’s easy to forget that only weeks ago GBP looked set to hit consecutive 18-month highs against the EUR, whilst it looked more likely than not to break that elusive 1.40 threshold against the USD.
Looking at the current economic climate, it’s perhaps easier to gauge why the Pound remains stuck in its current mire.
It’s now been widely reported that the UK government is planning a third round of booster jabs to help fight off the anticipated increase in Covid cases this winter and whilst hospital cases have plateaued somewhat, even the whispers of a controlled type of lockdown, or even a proposed implementation of any such short-term restrictions, is likely to once again out investors on the back foot.
Add to this reports this morning that a UK/US free trade deal is at best complicated or at worst unlikely, will also add another layer of trepidation for any investors who were looking for an immediate trigger to help support any significant buy up of GBP.
Whilst these issues are likely to remain at least in the short-term, rising inflation in the EU along with dovish economic growth forecasts, could help support or perhaps even boost the Pound’s value, although whether this will be significant is debatable to say the least.