There’s no getting around the fact the coronavirus crisis has upended our lives, changing our perception of normal, casting uncertainty over the future, and taking a toll on people’s mental well-being.
- Increasing uncertainty over Brexit weighs on pound
- Euro fails to capitalise on improved German consumer sentiment
- Global growth worries boost US dollar
Pound jitters likely on BoE policy decision
An increasing sense of anxiety over Brexit and upcoming trade negotiations between the UK and EU kept the pound on a weaker footing yesterday.
The latest Nationwide house price index showed a solid acceleration in house price growth but this wasn’t enough to shore up GBP exchange rates yesterday.
Additional weakness could be in store for the pound this afternoon in the wake of the Bank of England’s (BoE) policy announcement.
While the odds of an imminent interest rate cut have fallen over the course of the week any dovishness from policymakers could push GBP exchange rates sharply lower.
Euro looks for support from rising German inflation
The German GfK consumer confidence index unexpectedly improved on the month, offering the euro some encouragement.
However, as money supply growth in the Eurozone showed a sharp slowdown this fuelled renewed concerns over the prospect of weakening economic growth.
EUR exchange rates may find a stronger rallying point if the German consumer price index is found to have accelerated as forecast in January.
A higher level of inflationary pressure within the Eurozone’s powerhouse economy would offer the European Central Bank greater cause for confidence, opening the way for euro gains.
Signs of resilient US growth to encourage further US dollar gains
With investors expecting to see global growth dented as a result of the Wuhan coronavirus outbreak the US dollar continued to benefit from an increased sense of market risk aversion.
This helped to keep USD exchange rates on a positive footing even as anticipation for the Federal Reserve’s latest monetary policy decision mounted.
The US dollar could gain fresh ground if fourth quarter annualised gross domestic product demonstrates another solid three months of growth.
Evidence of greater resilience within the world’s largest economy would encourage further demand for the US dollar, particularly if worries over the global outlook continue to mount.
Thursday, 30th January 2020
12:00 GBP Bank of England Rate Decision
13:00 EUR German Consumer Price Index
13:30 USD Annualised Gross Domestic Product
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)