Market Update

  • July 21, 2021

Sterling edged lower this morning and was set for its fifth consecutive daily decline versus the dollar and Euro amid rising numbers of COVID Delta variant cases in Britain and confusion around the lifting of restriction in England.

The government said that while cases are rising, hospitalisations and deaths remained low.

Confusion on the removal of the lockdown measures remains a drag for the GBP in the near term.

Analysts said sterling will likely remain under pressure against the euro as Johnson’s government would outline its approach on the Northern Ireland protocol of the Brexit agreement to Britain’s parliament later today.

Rules agreed for the British-ruled province have been contentious since Britain severed ties with the EU.

Britain told the European Union on Tuesday to “think again” after the bloc published a plan for post-Brexit negotiations over the future of Gibraltar, which London said seeks to undermine British sovereignty over that territory.

Keeping sterling on check, a survey by Lloyds Bank showed that Britain’s economic bounce-back from the winter lockdowns cooled in June despite a surge in business for the hospitality sector.

In the meantime, British public sector net borrowing, excluding public sector banks, fell to 22.8 billion pounds ($31.0 billion) in June, still the second-highest June figure on record. Economists had forecast a drop to 21.6 billion pounds.

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