The Great Britain pound was extremely weak today, falling against all other most-traded currencies with the exception of safer ones, like the Japanese yen and Swiss franc (but not the US dollar, which outperformed the sterling). According to market analysts, the main reasons for the drop were Brexit fears and concerns about government spending plans.
UK Prime Minister Boris Johnson pledged to increase infrastructure spending, arguing that it will help the country’s economy to recover after the coronavirus pandemic by creating more jobs. The government will unveil the new spending plan tomorrow. Market participants were skeptical about the plan to increase public spending, questioning how the country will a current account deficit is going to pay for it.
Meanwhile, top Brexit negotiations from the United Kingdom and the European Union are meeting in Brussels. It is the first meeting in person since March due to the coronavirus pandemic. While politicians were making optimistic comments about the talks, traders were worried about Britain’s hardline stance in the negotiations and refusal to extend the deadline past the year’s end.
Macroeconomic data released by the Bank of England today was mixed. Net lending to individuals was at -£3.4 billion in May — an improvement compared with April’s -£7.4 billion and a better reading than -£4.0 billion predicted by analysts. At the same time, mortgage approvals fell to 9,300 instead of rising to about 25,000 as experts had predicted. Furthermore, it was the new record low for the indicator.
GBP/USD fell from 1.2323 to 1.2286 as of 18:31 GMT today, retreating from the session high of 1.2389. EUR/GBP gained from 0.9080 to 0.9140, touching the high of 0.9176 intraday. GBP/CHF was at 1.1695 after opening at 1.1683 and falling to the daily low of 1.1630.
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