More Stress for Sterling

<h3>GBPUSD &amp; EURGBP, H1</h3>
<p>Sterling came under pressure from the London open, pressing lower against both the Dollar and Euro, among other currencies. <strong>Cable</strong> turned below 1.2500 after earlier posting a six-day high at 1.2542, and currently trades at 1.2485 while <strong>EURGBP</strong> printed an intraday high at 0.9057, drawing back in on yesterday’s three-month peak at 0.9082 and now trades at 0.9030.</p>
<p>A combo of the upcoming EU recovery fund and the market perception that the BoE is unwinding monetary stimulus prematurely, has been giving EUR-GBP an underpinning of late. The brief rally that the Pound stage following yesterday’s much better than expected preliminary UK June PMI data was met by a wave of selling. The data, for one thing, compared to other well-above-forecast PMI readings in Europe. The BoE’s raising of its QE program by GBP 100 bln last week, and statement that purchases would be complete by year-end, works out (adding the existing purchase schedule plus with the new 100 bln schedule) at a GBP 6.6 bln tapering in gilt purchases per week. Although this represents a tightening in monetary policy, markets are viewing it as Sterling negative given the perceived risk to growth in the pandemic era. Also, BoE Governor Bailey indicated in a Bloomberg Opinion article on Monday that the QE total would be reduced before hiking interest rates, which marks a reversal of course from his predecessor, Carney. Overall, markets are taking this as the BoE giving forward guidance on unwinding stimulus, and viewing this in such febrile times, and with the Fed and ECB maintaining “will do whatever it takes” guidance, as being a negative for the currency, especially with the Brexit endgame remaining uncertain.</p>
<p><a href="https://analysis.hotforex.com/wp-content/uploads/2020/06/2020-06-24_16-44-14.png"><img class=" wp-image-144339 aligncenter" src="https://analysis.hotforex.com/wp-content/uploads/2020/06/2020-06-24_16-44-14-300×129.png" alt="" width="679" height="292" srcset="/wp-content/uploads/2020/06/2020-06-24_16-44-14-300×129.png 300w, /wp-content/uploads/2020/06/2020-06-24_16-44-14-1024×442.png 1024w, /wp-content/uploads/2020/06/2020-06-24_16-44-14-768×331.png 768w, /wp-content/uploads/2020/06/2020-06-24_16-44-14-696×300.png 696w, /wp-content/uploads/2020/06/2020-06-24_16-44-14-1068×461.png 1068w, /wp-content/uploads/2020/06/2020-06-24_16-44-14-973×420.png 973w, /wp-content/uploads/2020/06/2020-06-24_16-44-14.png 1411w" sizes="(max-width: 679px) 100vw, 679px" /></a></p>
<p><strong>1.2500</strong> remains a key psychological level for Cable both in the short and longer term, whilst <strong>0.9000</strong> has similar but less significant overtones for EURGBP traders and investors.</p>
<p><strong>Click </strong><a href="https://www.hotforex.com/en/trading-tools/economic-calendar.html"><strong>here</strong></a><strong> to access the HotForex Economic Calendar</strong></p>
<p><strong>Stuart Cowell</strong></p>
<p><strong>Head Market Analyst</strong></p>
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