Published: 25/05/2022 By ECAPYesterday saw the pound fall off sharply on renewed fears of the UK entering a recessionary period in 2023 on contracting UK PMI data results. Sterling however managed to claw back all losses across the trading day, pushing back over the 1.25 levels by close of play. This morning, however, the pound has come under renewed pressure as the Sue Gray report hits newswires and Boris Johnson comes under renewed focus surrounding "party-gate". With a resurgence of resignation claims, the PM questions held shortly will no doubt be closely watched by markets.
EURUSD has edged lower back under the 1.07 level as the dollar rebuilds its strength against the single currency, as ECB member Knot comments regarding the "ECB will have a large balance sheet for some time to come". The headline is in line with what ECB member Lane is also suggesting, that he does not expect a discussion about balance sheet reduction this year. It also ties to the narrative put out by Panetta earlier that the "natural way forward" is for the ECB to hike rates while keeping the stock of assets purchased under the APP and PEPP constant.