21/07 – If it’s not Covid, it’s Brexit

21/07 – If it’s not Covid, it’s Brexit

GBP: Eyes on Northern Ireland

EUR: Quiet ahead of the ECB

USD: In retreat for now


Sterling’s focus for once today will not be on Covid, but yet another harmful issue that has spread uncontrollably: Brexit.

The Johnson government is set to publish a policy paper on the post Brexit trade in Northern Ireland today which, given form and expectation, is set to put the UK and EU back on a path of conflict over the Withdrawal Agreement and the ongoing trade links between the two.

In the short term, this may also hinder the ability of sterling to rebound especially against the euro which has drifted into the 1.15s.


We can’t see the euro doing too much today ahead of an ECB meeting tomorrow that is being so closely watched. Our central scenario remains that the ECB is happy to pressure the euro lower and halt any appreciation by emphasising the transitory nature of inflation and the recovery from the pandemic.


After Monday’s run higher in the dollar caused by uncertain markets, a little bit of stability has come through in the past 24hrs, driven by opportunism more than anything. As we noted yesterday, some will see the move on Monday as a correction and some will see it as a harbinger of things to come. With an ECB meeting tomorrow that should be broadly risk supportive, we will need to see another strong move in US bond yields in our opinion for dollar to strengthen again from here.


The slight retreat in the USD overnight has been enough to help commodity currencies recover as well. For most, swallowing the price move in oil will take a few weeks, alongside the negative effects of the delta variant on global confidence. For now, AUD, NZD, CAD etc may struggle for traction.

Market rates

Today’s Interbank Rates at 08:27 against sterling. Movement vs yesterday.

Euro€1.157 ↓
US dollar$1.360 
Australian dollar$1.864 
South African randR20.00 
Japanese yen¥149.6 

Have a great day.

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Jeremy Thomson-Cook

Jeremy Thomson-Cook

Jeremy has over 13 years experience working in the FX industry. As a specialist in political risk mitigation and currency hedging, he regularly advises clients on the day-to-day moves of the markets and the implications of fiscal and monetary policy on international businesses.