Brexit negotiations are in full swing again this week. But there’s no conclusive agreement as to what will happen to the custom union beyond 2021. As a result, Sterling’s bounce on early Thursday gradually wore off.
Because of this, GBPEUR failed to reach 1.15 to end the ranging pattern. As Italy’s political situation remains a concern and the relative positions of UK/EU economies are not diverging much (both weakening), this ranging pattern is expected to continue. But we note the pattern of rising lows.
Now, turning to GBPUSD, the pair is faltering beneath 1.3500. It seems the long-dollar trade is continuing apace as the US 10-year bond yield stays above the 3% mark. Investors are weighing this question: What is the lowest risk for 3%? Many concluded: US bonds. At the time of writing, US 10-year bonds yield 3.1% whilst 10-year gilts fetch just 1.55%.
Jackson has over 10 years experience as a financial analyst. Previously a director of Stockcube Research as head of Investors Intelligence providing market timing advice and research to some of the world largest institutions and hedge funds.
Expertise: Global macroeconomic investment strategy, statistical backtesting, asset allocation, and cross-asset research.
Jackson has a PhD in Finance from Durham University.