The pound fell 0.5% on concerns about funding the spending plan

29.06.2020 21:07
The pound fell against the dollar and Euro on Monday, as investors shifted their focus to how the UK government will Finance a massive infrastructure program, and Brexit-related risks kept pressure on the pound.
After rising on the promise of infrastructure spending in early trade after the dollar weakened when investors feared a new wave of coronavirus cases in the US, the pound fell 0.5% to 1.2280.
"The pound earlier in the day, especially in the Asian session, looked like having support on the expectation of potentially strong growth, against the background of this (infrastructure spending), but I believe that in the European session, the market is a little more anxious about funding.
And we are looking at the UK having a current account deficit, " said Jane Foley, a currency analyst at Rabobank.
Against the Euro, the pound fell about 0.4% to 0.9156, below the level seen on Friday when it touched its lowest level against the Euro since March 26.
Doubts about whether Britain will conclude a trade agreement with the EU have also been a factor in the pressure on the pound, as little has been achieved in agreeing a future relationship with the EU.
"There is a lot of scepticism about whether the Johnson government will compromise with the EU, or whether it will just walk away and leave trade on WTO terms from January next year," Foley notes.
Johnson, who holds a "hard line" on future ties with the EU, signaled on Saturday that Britain would be ready to leave the transition regime with the EU "on Australia's terms" if no agreement was reached.
Australia does not have a comprehensive trade agreement with the EU. Most EU-Australia trade follows basic WTO rules, although there are specific agreements for certain goods.

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