Sterling has started the day relatively unchanged from yesterdays close against the EUR but has struggled against the USD as the demand for “safe haven” currencies returned overnight. Market focus today will be on the Bank of England Governor’s speech at 11.00 am. Governor Bailey will be hosting the BOE’s first Citizens’ panel open forum, where participants can hear directly from Bailey and take part in a Q&A session as well . He is expected to provide some views on how the central bank will shape the UK economy now and in the future. Later this afternoon PM Johnson will address the nation to unveil a new “contain framework” designed to prove to anxious workers that the pandemic is under control. The move will finally end the “work from home “ strategy as he is expected to relax guidance on the use of public transport allowing people to start commuting again in August.
All eyes today will be on today’s EU summit in Brussels where leaders will seek to overcome their differences over a proposed stimulus package. Markets are aware that there are major differences between member nations on the scale and the scope of the recovery fund . The fund is being planned to support the southern countries who have been hardest hit by coronavirus, but a “frugal” group of nations consisting of the Netherlands, Austria, Denmark and Sweden are expected to argue that the recovery fund is too big and should be based on loans rather than grants.
The dollar held onto its gains against most currencies in early trading as worries that a resurgence in virus cases will start to curb economic activity. Another jump in infections in California and other States has raised fears that the economy will continue to struggle . Deteriorating US-China relations is also cited by some traders as a reason for the flow into the U.S currency.