Failed EU and UK Talks Cause Pound to Slump

The Pound struggled on Wednesday as a result of failed talks around the Northern Ireland Protocol between the UK and EU.

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Investors feared that tensions could grow into a trade war and that placed pressure on the Pound. The currency had initially made gains during the morning after the Bank of England intimated that the UK could begin to reduce stimulus although these gains were eventually lost after the failed talks. This saw the Pound finish at 1.1587 against the Euro and 1.4111 against the US Dollar according to the Foreign Exchange Market.

It was a different day for the Euro as it took advantage of the Pound struggling. The single currency also benefited from the possibility of more economies opening throughout Europe, as France and Belgium both lifted restrictions. Along with this, the vaccination programme is still gathering pace and moving in the right direction.

Throughout yesterday’s session, the US Dollar fluctuated, as it started the day off by falling as a result of low treasury yields. Yields dropped to a 3-month low yesterday although they did begin to creep upwards as the day went on. This led to an increase in demand, which helped the US Dollar to recover.

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