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- Pound stumbles as UK goes into lockdown
- Euro benefits from US dollar losses
- Federal Reserve announces quantitative easing
Pound vulnerable to UK service sector decline
The pound came under pressure yesterday as Boris Johnson announced strict new quarantine measures in an effort to stop the spread of the coronavirus.
GBP exchange rates could extend losses this morning with the release of March’s initial UK manufacturing and services PMIs.
Particular focus will fall on the service sector data, given that the sector accounts for more than three quarters of the UK gross domestic product.
If the index dips back into contraction territory as forecast the mood towards the pound looks set to sour.
Euro benefits from US dollar weakness
Weakness in the US dollar helped bolster demand for the euro yesterday.
The common currency also found support after Eurozone consumer confidence fell less-than-expected this month.
However, the euro could slide today as investors brace for dire PMI figures.
Economists have forecast that private sector growth plummeted to a record low.
US dollar dips as Fed unleashes fresh stimulus
The US dollar stumbled on Monday, with the US currency coming under pressure following the announcement of an aggressive new stimulus plan from the Federal Reserve.
The new measures involve the Fed greatly expanding its quantitative easing programme, with a vow to purchase as many government bonds as needed to support the US economy through the coronavirus crisis.
The Fed’s statement read:
‘The Federal Open Market Committee (FOMC) will purchase Treasury securities and agency mortgage-backed securities in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy.’
Tuesday, 24th March 2020
09:00 EUR Eurozone Manufacturing PMI
09:30 GBP Services PMI
14:00 USD Richmond Fed Manufacturing Index
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