The pound rose against the US dollar following strong UK labour-market numbers. British employers added a record 241,000 staff in August, pushing the total number of employees on company payrolls above pre-pandemic levels, official data showed on Tuesday.

The latest unemployment report by the Office for National Statistics shows job vacancies rose above one million for the first time since records began as the UK economy continues to recover from the Covid-19 pandemic, while payrolls rose by more than expected. The strong data will possibly help persuade Bank of England policymakers that perhaps UK monetary policy could be tightened sooner than expected.

Jobs data

The latest unemployment report showed the number of vacancies in the three months to August to have reached above one million, as firms struggled to fill positions mainly in the hospitality, transport and storage sectors. It also showed a lower unemployment rate and a monthly increase in August payrolls.

The ONS stated: “The fastest rate of growth was seen in other service activities, which grew by 93.3% (12,500), followed by transport and storage at 76.3% (20,300) and accommodation and food service activities at 75.4% (57,600). In the latter two categories labour demand has increased rapidly while staff availability fell because of a mix of employees leaving these sectors to find employment elsewhere and a reluctance of workers to return to their previous roles.”

Minister for Employment Mims Davies MP has welcomed the rise in payrolls and said: “As we continue to push ahead with our recovery, it’s great to see another significant fall in unemployment and the number of people on payrolls rising by 241,000 in August – the biggest monthly increase on record – showing our Plan for Jobs is working. We’re helping employers recruit for the record number of vacancies out there, particularly in growing sectors, and supporting people of all ages and backgrounds to overcome barriers, land their next role, and progress in work.”

While payroll employment is back at pre-pandemic levels, there are still many years ahead of recovery, with employment more than 700,000 down and long-term unemployment up 45%. There are still more than a million people furloughed and with the scheme ending this month, more people will be looking to find employment.  

Furlough scheme concerns

Economists and politicians are worried that with the furlough scheme ending this month, jobs recovery will be hurt, after the rise in payrolls and vacancies. A lot of furloughed staff might not even return to their jobs as a lot have had their wages subsidised and might not be kept into full-time employment.

There is also a skill shortage as many industries have reported a lack of available labour and hiring difficulties. With Covid adding more uncertainty after Brexit and the new national insurance tax adding more costs to employers, it is unclear how businesses will respond to future hiring needs.

While the data is positive for the pound, investors remain cautious ahead of Wednesday’s UK inflation data, which could show an increase in the core rate in August to 2.9% year/year from July’s 1.8%.

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Analysts are positive that the pound will likely continue to strengthen in the coming days and even weeks, after encouraging news that the economy should show strong growth in the third quarter and the Bank of England is considering raising interest rates in early 2022.

Growth is expected to continue

Friday’s disappointing GDP data which showed that the economy grew very little did not affect market sentiment, as economists argued that many of the reasons behind the slowdown were associated with the past including self-isolation rules. August and September GDP numbers are expected to be stronger, confirming expectations that the economy is healthy. Economic thinktank NIESR has forecast that UK growth will have picked up in August and September, due to the domestic tourism and hospitality industries, with September’s growth to rise to 0.8%.  

The pound was higher against both the euro and the US dollar on Monday morning, as markets are confident that the BoE could move faster than both the ECB and Federal Reserve and raise interest rates early next year. This will also depend on positive economic data coming out of the UK and investors will want to see consistently positive news before they become confident about the strength of the UK currency.

On Friday, the pound reached a two-week high, following its previous lows, but fell again after global sentiment was threatened by rekindled fears regarding the troubled relationship between the US and China.

Bank of England and rates

The Bank of England is expected to raise interest rates in the first half of 2022 due to improved economic conditions including growth rates and rising inflation. Economists are concerned that inflation will rise above the Bank’s target and for a longer period of time, which could lead to further interest rate rises. This will help boost the pound too.

The Bank of England appears to be more positive and ready to push interest rates higher than many other central banks such as the Swiss National Bank, the ECB and the Bank of Japan.  Following last week’s Monetary Policy Committee members’ appearance before a Parliamentary sub-committee and the revelation that half of the members are already convinced that the minimum conditions for an interest rate hike have been met, the pound has strengthened.

If the recent uncertainty caused by the rapid spread of the Delta variant of the coronavirus proves to be temporary, then the pound will find further support. Economists are still cautious about the pound considering the return to school and the possibility of more cases. The winter is also a concern, and with the number of high cases continuing, consumer spending could be affected. With or without any new restrictions, activity could still suffer as consumers become more cautious. Bloomberg has also highlighted the ending of several government support programmes this month that could weigh on sentiment.

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The pound was higher against the US dollar on Monday amid little economic data releases and thin trading. The US dollar fell after Friday’s dovish speech by Fed Chair Jerome Powell. Jerome Powell indicated Friday that the central bank will possibly begin tapering before the end of the year, but a rate hike was not imminent as there is still “much ground to cover” before the economy reaches full employment. At the same time, there could be some risk ahead for the pound, due to renewed Brexit concerns.

Jackson Hole symposium

In his much-anticipated speech at the Jackson Hole symposium, Fed Chair Jerome Powel said that the central bank could start tapering its stimulus programme by the end of the year, easing market fears for a quicker withdrawal of its funding.

The Fed took its benchmark rate down to almost zero and accelerated its quantitative easing programme in an attempt to resuscitate the economy during the early days of the Covid-19 pandemic.

The question of when the Fed will begin to tighten its programme has been the main concern for markets for some time now, and it might remain as Powell avoided to give any definite answers. The Fed is aware that any specific answers could seriously impact the global economy, this is why it has chosen to postpone any reduction of its funding.

“The timing and pace of the coming reduction in asset purchases will not be intended to carry a direct signal regarding the timing of interest rate liftoff, for which we have articulated a different and substantially more stringent test,” Powell said during the summit. He added that inflation is close to the Fed’s 2% target rate, but “we have much ground to cover to reach maximum employment.” Markets reacted positively to Powell’s comments, with major stock indexes rising higher.  

Fed Vice Chairman Richard Clarida also agreed with Powell’s remarks. He explained that tapering could be possible by the end of this year, as long as labour gains continue: “I think that if that materialises, then I would support commencing a reduction in the pace of our purchases later this year,” Clarida noted.

The Fed said that “substantial further progress” will need to be seen before tightening policy. Powell said that in terms of inflation the “test has been met” and that there “has also been clear progress toward maximum employment.” He said that the Fed agreed at the July Federal Open Market Committee meeting that “it could be appropriate to start reducing the pace of asset purchases this year.”

Powell defended the Fed’s policy and decision not to make an “ill-timed policy move” and stated: “Today, with substantial slack remaining in the labour market and the pandemic continuing, such a mistake could be particularly harmful. We know that extended periods of unemployment can mean lasting harm to workers and to the productive capacity of the economy.” Additionally, he stressed that the delta variant “presents a near-term risk” but “the prospects are good for continued progress toward maximum employment.”

Renewed Brexit concerns

The UK government supply chain crisis could have a significant impact on Christmas and create further food shortages over the next year too. Iceland, Nandos, KFC, McDonald’s, and Tesco are among the many businesses that are reporting stock issues as a result of lorry driver shortage due to Brexit. Restaurant chains Nandos and KFC are facing chicken shortages, McDonald’s is finding it difficult to make milkshakes and Iceland is running out of bread and soft drinks. The problem has become noticeable over the summer when social media was flooded with images of empty shelves.

The disruption was then largely blamed on the “”, but businesses have for a long time now warned of a chronic shortage of lorry drivers due to Brexit. Speaking to BBC Radio 4’s Today programme, Iceland managing director Richard Walker said the lack of lorry drivers “is impacting the food supply chain on a daily basis.” “We’ve had deliveries cancelled for the first time since the pandemic began, about 30-40 deliveries a day,” he said.

British Poultry Council chief executive Richard Griffiths said last week that “When you don’t have people, you have a problem - and this is something we are seeing across the whole supply chain. The labour crisis is a Brexit issue,” he said.

Nick Allen of the British Meat Processors Association warned that such shortages will impact on Christmas staples: “We are cutting back and prioritising lines and cutting out on things, so there just won’t be the totals of Christmas favourites like we are used to.”

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If strong domestic data confirm expectations that the UK economy is growing, then the pound could rise higher. According to a recent UK business activity survey, the August Bank holiday weekend is expected to push business revenue higher as more consumers flock to the shops.

Sterling will remain volatile due to global developments and concerns about the spread of the new Covid variant, but UK economic growth and Bank of England policy will also be key drivers of the currency. The release of better-than-expected economic data will offer much needed support to the economy and the pound.

Pound sentiment suppressed due to labour market concerns

Concerns that a labour shortage could impact on the UK’s economic recovery have been expressed in the quarterly survey from the Confederation of British Industry (CBI). A quarterly survey conducted by the CBI from July 29 to Aug. 16, showed that optimism was at minus 17% this month, down from May’s 47% as companies struggled to bounce back after the pandemic. Charlotte Dendy principal economist for the CBI, said on Thursday that “Firms in sectors such as hotels, restaurants and travel do not expect this strength to persist into the next quarter, reflecting the pressure that consumer services firms continue to face.” Labour shortages could weigh on businesses’ investment plans for the next 12 months.

For services businesses, there are added costs and higher wages after the pandemic that they need to resolve, while Brexit has made it more difficult to access talent from the EU. An index tracing the outlook for costs showed that it has reached the higher in two years and is starting to filter through to the prices, with average selling prices rising at the fastest rate since 2019.

Bank of England interest rate hike

The Bank of England is expected to raise interest rates in 2022, but analysts say that for the pound to rise higher in a sustained manner it will take an earlier hike, or more than one interest rate rises after 2022. Markets are hopeful that the economy will expand, and the labour market improve in order to see any substantial shift higher in the pound’s performance.

Short-term pound volatility

Federal Reserve Chair Jerome Powell's speech to the Jackson Hole economic conference on Friday will possibly offer few new hints about ending its quantitative easing programme. If it does show any clear indication that it intends to proceed with tapering the $120 billion in monthly purchases of Treasuries and mortgage-backed securities, then this will have a negative impact on global economic growth, but it will be supportive of the Dollar. If the Fed indicates that they are not yet ready to proceed to reduce its massive asset purchases, as the delta variant continues to spread rapidly igniting further fears of an economic slowdown, then the US dollar will fall. As Goldman Sachs economists have said earlier this week, Powell will be cautious not to lock in a specific date for starting the taper and he would keep the possibility for starting in November open.

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Sterling’s major weakness in the near future is a potential weakening in risk sentiment which will also weigh on global stock markets, hitting risk-correlated currencies. According to analysts, global risk sentiment will remain one of the key external drivers of the UK currency. At the same time, if global developments improve and equities stabilise, the pound will still need a boost from domestic factors such as stronger domestic data to recover some of its most recent losses. For the pound to continue to strengthen, the market will need to become convinced that the medium-term growth outlook for the UK economy is improving markedly. This would require some real productivity gains to be realised over the coming months and years.

While UK fundamentals have proven to be supportive, the global picture is very important for Sterling, especially when stock markets suffer, risk sentiment is low, and investors are usually spooked.

Risk appetite in global financial markets

Analysts have noticed a pattern emerging where the pound falls against the euro in times of risk off conditions. The pound commonly benefits from strong global growth, which has also been the case for the euro. When there is limited financial risk, investors tend to take more risks, therefore creating a “risk-on” situation. However, when there is uncertainty and high volatility, what is also called a “risk-off” environment, traders want to avoid risk and they sell their higher-yielding assets and move their funds to safe-haven currencies.

The euro as a risk-off currency

While the euro like the pound has been the beneficiary of positive market sentiment, more recently, this has changed, and it seems that the single currency benefits against the pound when global investor sentiment weakens. What this means, is that the euro has become a risk off currency.

  • Risk off currency

A risk off currency gains when stock markets decline as investors want to avoid risk and sell their risky assets.

  • Cyclical currency

The euro used to be seen as a cyclical currency but is much less now. Cyclical currencies such as the pound and AUD tend to appreciate when global economic growth is expanding, unlike the US dollar, the yen and Franc which are seen as safe havens.

The euro has benefited when stock markets are selling off and it has given the impression that is a safe-haven asset. According to research from HSBC, due to the low interest rate environment in the Eurozone, billions of cheap euros are borrowed, sold and repatriated into euros, creating demand on the currency and “establishing an impression that it is now a 'safe haven' asset during times of market stress.” Head of FX Research at HSBC Paul Mackel explained that this shift in the euro “comes down to the low growth, low rates environment that has become seemingly endemic in the region,” and is “a consequence of the ECB’s quantitative easing programme and shift to negative rates.” Mackel added that "Signs that rates may be lower for even longer could encourage these outflows to continue, or even exacerbate them.”

"For many years, the EUR was seen as a cyclical play, which benefited from strong global growth. However, the last decade or so has seen overseas asset accumulation outstrip inflows from foreign investors. This could start to change the way in which the EUR behaves,” Mackel said.  

Pound-Euro outlook

If you are a business exchanging pounds to euros or vice versa, it is beneficial to understand this dynamic and how risk sentiment and appetite affect the currency pair. For the pound then to appreciate against the euro, there will need to be improvement in global market conditions. If, on the contrary, global growth and markets are at risk, the euro could appreciate. The rapid spread of another Covid variant or any quick move by the Federal Reserve to withdraw its financial support are seen as major risks to the global economy and the pound in particular.

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The British currency rose against the US dollar and the euro, after the return of investor confidence.  With the recovery of major stock markets, investor risk appetite returned helping boost currencies such as the pound which are closely influenced by global market sentiment. The pound is considered a risk currency and is vulnerable to risk-off sentiment at times of risk-on.

Major concerns such as the Delta variant and the Fed’s removal of its stimulus programme will be the main drivers for global currencies such as Sterling. While there is still significant uncertainty about how the delta variant will affect markets, most developed economies are expected to grow steadily. Nonetheless, Sterling will remain sensitive to global developments than domestic economic data, as the economic calendar is thin with releases of little impact.

Risk on and Risk off sentiment

The widespread risk on and risk off sentiment, also known as RORO is the major driver of currencies in the market at the moment. Two of the key concerns of global investors are the withdrawal of the Federal Reserve’s stimulus and the rapid spread of the Delta variant in Asia.

But what is exactly risk sentiment? Simply, risk-on risk-off refers to shifts in investment activity as a result of global economic events. The foreign exchange market is basically affected by changes in the ways investors behave and where they choose to invest. The theory states that investors engage in higher risk trades when the risk is considered low and avoid high-risk investments when the risk is perceived to be high. So, investor appetite changes depending on global sentiment and whether risk is high or low. For example, the 2008 financial crisis was considered a risk-off year, as investors avoided risk by selling their risky assets and turning towards low or no risk positions such as U.S. Treasury bonds.

The risk-on risk-off sentiment is also affected by different asset classes, as some carry higher risks. Stocks are riskier than bonds and so when stocks are preferred more than bonds then the market is considered a risk-on environment. A risk-on environment is one where investors invest into riskier assets.

A risk-on environment is usually one where a combination of positive economic factors, data and events co-exists, showing that the market is healthy and strong, and risk is limited. Strong economic data such as corporate earnings, an optimistic outlook, and supportive central bank policies reflect a market where investors have more room to take on more risk.

Federal Reserve and monetary stimulus

In the coming week, the fundamental concern for markets will be the Federal Reserve's decision to withdraw monetary stimulus. On Thursday, Federal Reserve Chair Jerome Powell will give a speech at the Jackson Hole central banking symposium and investors expect him to announce the Fed is ready to start reducing stimulus, possibly as soon as this September. While this is good news for the  US dollar, stock markets which have been supported by the Fed’s funding will find the news disappointing. This will also affect the British pound which could fall following such an announcement. For some analysts, Powell might avoid bringing up monetary policy at the symposium, but others believe that the dollar will weaken if the Fed postpones the planned withdrawal of its funding.

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The pound might experience some volatility today as the Bank of England delivers its August policy decision and Monetary Policy Report. Analysts expect the pound to rise against both the US dollar and euro. At the same time, with many not expecting any major shifts in the bank’s policy, analysts will focus more on Governor Andrew Bailey’s tone and comments for guidance. If the bank strikes a hawkish tone, then the pound might rise, but if it is dovish, then the pound could fall. In general, the market expects interest rates to rise by the end of August 2022, which could help boost the pound, but if a rate increase is pushed back into 2023 then the pound might react by falling.

Scenario 1: Pound could rise

If there are signs that the Bank of England is moving toward ending its quantitative easing programme by the end of 2021 and raising interest rates in 2022, then the pound will find support.  

A currency strategist at UBS said: "We are likely to be served a more hawkish tone, but it will likely fall short of any policy announcement. Still, with nearly all restrictions now removed and COVID-19 cases falling back in the UK, we continue to believe sterling should outperform against both the dollar and the euro over the coming months.”

Market analysts also feel that if there are dissenting voices in the Monetary Policy Committee, then the pound could rise as the possibility of an earlier-than-expected reduction of the QE programme could happen in future meetings. Some monetary policy committee members have already hinted that they may support an early end to quantitative easing (QE), especially following the rise in UK inflation. That could help offer support to the pound. The Bank of England could also provide more clarity regarding the ways it will seek to slowly reduce its QE programme, which will also be met as a positive sign. If the bank offers a clear signal that it will assess the size of its QE in each meeting or even better intends to conclude it in the autumn, then this will be clearly bullish for Sterling.

Scenario 2: Pound could weaken

If there is any disappointing news from the Bank, then the pound could weaken. While market expectations have been boosted due to hawkish comments by Bank of England members for a reduction of the BoE’s asset purchase programme, these could be subverted, as the Bank might stress more risks ahead and weak market data. For this reason, the BoE might want to wait and see how the labour market performs and if wage growth is sustainable before they make any rush decisions. This is why the Bank might strike a more cautious tone, as they would like to see more data assessing the status of the economy, especially after the end of the government's furlough scheme in September. Some analysts expect a more hawkish tone in February 2022 when economic activity is expected to be back to normal.

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The pound fell against the euro and US dollar ahead of Thursday's Bank of England policy meeting. The fall is a result of investors’ belief that the pound will fall further. More generally, the third wave in Covid-19 infections and the slowdown in business activity has not helped boost market sentiment. If the bank strikes a cautious tone, market analysts believe that the pound might suffer.

Bank of England

Markets are expecting the Bank to keep interest rates and its quantitative programme the same, without making any major changes to its policy. But, it is also expected to readjust its economic forecasts and provide further guidance about the end of its quantitative easing programme while also offering a general outlook for interest rates. Thursday’s policy update coincides with the release of the quarterly Monetary Policy Report which will possibly shed some more light on when a 2022 interest rate rise will happen.

If the quantitative easing programme is reduced or there is a larger than expected increase to the BoE's inflation projections, the pound could get a boost. The latter will increase the possibility of a rate increase much earlier than expected. In general, if the bank provides more clarity on how it will begin cutting down its stimulus programme, then the pound will most likely rise.

Bank of America analysts are very hawkish and positive and expect the Bank of England to raise interest rates to 0.25% in May 2022. If the bank does signal a rate rise for 2022, then the pound could rise higher.

Outlook for pound

For economists and analysts, buying Sterling with the expectation that it will rise is something that makes sense, despite the dissenting voices of some of the bank’s members. While getting the economy back and running to pre-pandemic levels might take a while, the path towards normalisation seems clear. The pound’s path, however, might find possible obstacles if the US dollar rises.

Other analysts, believe that the fundamental backdrop remains unsure for Sterling and that any gains are short-lived, as they remain cautious.

Economists at HSBC do not expect any major shifts at the Bank of England’s meeting on Thursday, so the GBP/USD pair may experience some downside pressure. According to them, the cautious tone of the bank will hurt the pound. They said: “The GBP remains somewhat attuned to global risk appetite and so may see its fortunes partly determined by this factor, but local drivers seem to be getting more dominant and suggest further depreciation pressure over the near term. Given the rapid spread of the COVID-19 Delta variant, the removal of most remaining restrictions on 19 July has failed to provide the GBP with a boost. At the Bank of England’s (BoE) meeting on 5 August, a cautious tone (warning against the dangers of premature tightening) is likely to be prominent, as uncertainty remains high and most policymakers view the inflation upswing as temporary. The rates market prices in a 15bp hike in May 2022 for now, and so if the BoE repeats its cautious tone, this may pose some downside risks to the GBP.”

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Sterling fell against the US dollar following global stock markets’ plunge. The fall was driven by a sell-off in Chinese shares, which dampened risk sentiment and led to increased trading of the US dollar ahead of a US Federal Reserve policy meeting.

Risk-averse market sentiment

As we have seen recently, the pound is sensitive to how global markets are fairing as well as how the pandemic is progressing. According to some analysts, the pound could find support if cases continue to fall, especially since data on Monday showed that new Covid-19 cases in Britain had fell for five consecutive days. Market analysts have suggested that the pound’s fall was mainly driven by nervous and risk-averse market sentiment due to the sell-off of Chinese tech stocks. Risk trades have been hit as a result and so has the pound.

For investors, a lot will depend on the two bank meetings coming up: the two-day Fed meeting later on Tuesday, and the Bank of England meeting next week. The BoE’s interest-rate setter Gertjan Vlieghe while speaking in an event explained that the the central bank should not cut back its stimulus before 2022, as the recent rise in inflation is temporary while Covid-19 poses a significant risk to growth.

Covid-19 declines offer a boost

Earlier on Tuesday, the pound got a boost after the number of new positive cases fell significantly. Investors will expect to see more statistics about the numbers of cases and deaths before they can make informed decisions.

The recent rising cases had an impact on economic data which showed that the economy was growing at a slow pace as businesses complained about the rising cases and employees self-isolating after coming in close contact with someone who had been tested positive. The ongoing pandemic and the risks posed by it have confirmed that it is perhaps too soon for the Bank of England to raise interest rates, as it needs to continue its financial support rather than tighten its programme. The rise of the Delta variant of Covid-19 combined means that the bank needs to continue offering support to the economy.  

If Covid cases continue to fall then the pound could find support. The UK has also acted as a test case, and it remains to be seen whether its decision to reopen its economy has been the right one. Nonetheless, analysts argue that data has shown that the UK economy does not depend on the virus and that vaccines are working. If the country does succeed to beat the Delta variant, without its economy being massively affected with further restrictions, then their example could be followed by other economies. This could further help the pound which is influenced by global sentiment.

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The improved global market sentiment and the slowing of Covid-19 case rates has helped the pound to recover, but Brexit anxieties could pose a potential threat to the currency.

Covid-19 and the NHS app

This week alone 96 deaths have been reported, the highest number since March. While on 1 June there were 0 coronavirus deaths, 1,114 deaths have been reported since then with 73 deaths being reported on Wednesday (21 July). The vaccination programme has not managed to break the link between infections and fatalities, with the total number of deaths from the pandemic reaching 128,896. However, new cases have not risen considerably, as the number of new cases that were reported on Wednesday was 44,104, slightly higher than the previous week’s 42,302. As it stands, 46,388,744 people have been vaccinated at least with the first shot in the UK. According to statistics, around 39,035 people had their first jab on Tuesday, while 161,279 people had their second shot yesterday, with 36,404,566 people now being fully inoculated.

With the ongoing self-isolation of workers due to coming into close contact with a positive coronavirus case, businesses have been affected, while the government has expressed its apologies for the inconvenience. Director of food and sustainability at the British Retail Consortium Andrew Opie told The Times that the "pingdemic” has put pressure on retailers who found it difficult to keep stores open and shelves stocked, demanded that the government needed to act fast.

Boris Johnson, speaking at the last PMQs before the summer recess, said "everybody understands the inconvenience of being pinged". The prime minister himself had to isolate after coming into contact with Covid-positive Health Secretary Sajid Javid last week.

Labour leader Sir Keir Starmer accused the prime minister of the mixed messages regarding the NHS Covid-19 app and said: "When it comes to creating confusion, the prime minister is a super-spreader.” Starmer had to isolate himself following one of his children being tested positive.

According to the figures from the ONS, around 9 in 10 adults in all parts of the UK could possibly have Covid-19 antibodies with the estimates ranging from 88.6% in Scotland to 92.6% in Wales, 90.0% for Northern Ireland and 91.9% for England.

Brexit and Covid-19: How will the pound fair?

It simply depends on improved market sentiment and the management of the Covid-19 Delta variant. The near-term outlook for Sterling will be determined by concerns regarding the Delta variant and whether investors have fully priced in the news.  If they have done so, then possibly the currency and market sentiment will improve. 

Brexit remains a threat to the currency too, as the UK and EU could find themselves at the opposite end of the table over the Northern Ireland question. On Wednesday, the UK announced its intention to renegotiate certain points included in the Northern Ireland protocol, and argued that in its current form it will create problems for trading goods between Great Britain and Northern Ireland. The release of the command paper outlining the UK government proposals about how the Protocol should be changed poses a major challenge to the EU.  This move could potentially hurt the pound, according to analysts. However, they believe that this could become a more serious concern as we move closer to 1 October with potential legal battles and EU threatening the UK with the imposition of trade sanctions.

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