With global stock/indices rallying for the second day, the US Dollar lost ground across a broad range of currencies. Sterling buyers returned during Wednesday’s afternoon session (the largest daily gains in 2 weeks against the US Dollar). Major technical support at $1.3600 has held this week despite registering a weekly low of $1.3575 and holding in the Asian session above $1.3700. Despite bad news on all fronts for the UK, Sterling has been the main beneficiary during the last 24 hours, probably influenced by ‘stop loss’ speculative positioning too. The Pound remains volatile on headline news surrounding Northern Ireland (and Covid). Despite the EU rejecting Brexit Minister Frost’s calls for parts of the protocol to be rewritten, the UK prefer to go back to the negotiating table (probably a good thing), rather than invoke Article 16 which allows either side to dispense with its terms. Against the Euro, 1.1600 has held overnight, this likely to remain pivotal based on a weekly close. BoE’s Broadbent speaks at 9.30am and the CBI’s industrial trends for July are released at 11am. The ECB policy decision and statement will be the main event today.

As investors bought into the ‘sell off’ in stocks/indices for the second day, the Dow Jones Index and S&P have now recovered all their losses on the week. Dollar ‘safe-haven’ buying interest also seen this week has lost its appeal as a result. The latest jobless claims are released at 1.30pm and existing home sales at 3pm.

The Euro recovered moderately in the weaker US dollar environment having traded either side of 1.1800 overnight. Investors await the ECB policy decision and statement today. They are expected to leave its deposit facility rate at -0.50% for now and also continue with asset purchases. Analysts will be waiting for more information on the future pace of purchases and hints about when the bank will start tapering.