The Pound Sterling went back onto the front foot on Tuesday, recovering some of the losses suffered against the Euro and Dollar over previous hours. Of course, the spotlight was increasingly turning to the EU-UK trade negotiations upside will likely be limited in nature.
The Pound-to-Dollar exchange rate was seen trading half a percent higher at 1.2987 while the Pound-to-Euro exchange rate is higher by 0.45% at 1.1965.
The gains for Sterling come amidst ongoing market fears concerning the impact of the coronavirus on the global economy and suggests the UK currency remains largely immune to sentiment over the outbreak.
"GBP continues to perform idiosyncratically rather than as a traditional reserve currency," Paul Meggyesi, Head of FX Research at JP Morgan told poundsterlinglive.com, referencing the Pound's apparently detached performance relative to coronavirus concerns.
The Pound's apparent independence from global investment trends is perhaps largely down to the overarching impact EU-UK trade negotiations are expected to have on the currency over the course of 2020: should the two sides agree a comprehensive free trade deal by year-end then Sterling's upside potential could be released. However, fractious negotiations and the ultimate failure of trade negotiations could unleash some significant downside, similar to that seen in 2019 when markets fretted over the prospect of a no deal Brexit.
"The UK Pound's recent performance can be considered somewhat confusing. The currency has been torn for weeks between emerging optimism resulting from the recent economic data, and the potentially challenging EU-UK trade negotiations," says Marc-André Fongern, Head of Research at Fongern FX.
