“The positive seasonality effect that has been propping up the GBP so far in April is running out of steam.  Moreover, the UK economy is continuing to slow down precipitously and the still-elevated number of Covid-19 cases is seemingly making Boris Johnson’s government reticent to consider measures to ease the lockdown.

The GBP also seems disadvantaged by the fact that big multinational commodity producers are listed in the UK and thus render the FTSE (and the GBP) more highly correlated with swings in global commodity prices and risk sentiment. In addition, investors could start worrying about Brexit all over again in the coming weeks, as the June deadline to extend the Brexit transition period draws into view.  In all, Brexit uncertainty could rear its ugly head again and weigh on the GBP before long,” CACIB notes.

“Next week’s data calendar is relatively empty, leaving markets to focus on the evolution of the Covid-19 pandemic and the looming clash over the Brexit transition period,” CACIB adds.

For lots more FX trades from major banks,  sign up to eFXplus

By signing up for eFXplus via the link above, you are directly supporting Forex Crunch.