GBP

Sterling opened relatively unchanged against the Euro, having seen moderate gains against the Dollar late on Tuesday as US stocks recovered most of the losses seen from Monday’s crash. Nevertheless, the Pound is trading at 5-month lows v Dollar, the main worry facing the UK is whether the current rise in infection rates start to crack the vaccine wall that has been erected over the last 8 months, just as furlough measures are starting to roll off. As a result, UK gilt yields eased as investors now question the pace of the economic recovery that was expected in the UK. Public sector borrowing for June improved somewhat, coming in at £23.6 billion (consensus £24.8 billion).

US
The aggressive recovery in US indices probably halted any further rally for the Dollar on Tuesday. Markets are likely to focus on Covid as infections grow globally, the Dollar maintaining its ‘safe-haven’ status for the time being.

EUR
Still trading at 3-month lows against the Dollar ahead of tomorrows ECB meeting and statement, having held below $1.1800 in Asian markets.