Every day brings revised predictions about the impact of the coronavirus crisis on the global economy.
- Pound rallies on solid quarterly UK growth rate
- Spanish election deadlock dents euro
- Growing trade anxiety limits New Zealand dollar support
Steady UK wage growth set to extend pound gains
As quarterly growth returned to positive territory in the third quarter the pound made gains across the board.
Although the monthly gross domestic product showed a -0.1% contraction this failed to put any dampener on GBP exchange rates yesterday.
Sterling also benefited from the news that the Brexit party doesn’t plan to contest Conservative seats in the upcoming election.
Another solid set of UK average weekly earnings figures may offer a further boost to the pound this morning.
Stronger wage growth would limit the case for a Bank of England (BoE) interest rate cut, helping to keep GBP exchange rates on a bullish trend.
Improved German economic confidence forecast to boost euro
The inconclusive nature of Sunday’s Spanish general election offered little support to the euro at the start of the week.
However, as forecasts point towards an improvement in the German ZEW economic sentiment survey EUR exchange rates could find a rallying point this morning.
Although the index is expected to remain in negative territory an uptick from -22.8 to -13.0 would suggest that confidence within the German economy is starting to recover.
If either the German or Eurozone indexes fall further into decline, though, this is likely to weigh heavily on the single currency.
New Zealand dollar set for weakness ahead of RBNZ announcement
Increasing doubt over the likelihood of an imminent US-China trade agreement limited the upside potential of the New Zealand dollar yesterday.
Unless the New Zealand food price index shows an uptick in inflationary pressure NZD exchange rates are expected to come under increased pressure over the course of the day.
As anticipation mounts for tonight’s Reserve Bank of New Zealand (RBNZ) interest rate announcement investors are unlikely to see much incentive to favour the New Zealand dollar.
With interest rates expected to be cut to a fresh record low NZD exchange rates look set to trend lower in the wake of the announcement.
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)