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EUR/USD slides to lowest levels since May 2017 on gloomy German GDP

currency-newsEUR/USD slides to lowest levels since May 2017 on gloomy German GDP

The euro extended its run of losses into its tenth consecutive session on Friday as Germany’s latest GDP figures painted a grim picture of the Eurozone’s largest economy.

The pound opens this week mostly rangebound, with GBP/EUR muted at €1.2024 and GBP/USD subdued at $1.3037. GBP/CAD and GBP/NZD are holding steady at C$1.7265 and NZ$2.0274 respectively, while GBP/AUD slips to AU$1.9381.

Coming up it looks to be a busy week for GBP investors, with a slew of high impact UK data scheduled for release throughout the session.

What’s been happening?

The euro closed last week on a sour note, falling to a new two and a half year low against the US dollar in response to Germany’s latest GDP figures.

The latest growth estimate revealed Europe’s largest economy stagnated in the last quarter of 2019, stoking concerns Germany could face a recession in 2020 amid increased economic headwinds at the start of the year.

Carsten Brzeski, Chief Economist at ING Germany said:

‘The latest soft indicators and industrial data for December do not bode well for the short-term outlook. 

Also, the impact from the coronavirus on the Chinese economy is likely to delay any rebound in the manufacturing sector as it at least temporarily disrupts supply chains.’

After soaring on Thursday, the pound edged lower on Friday in response to some modest profit taking and lingering Brexit jitters.

Meanwhile, the US dollar remained supported at the end of last week as coronavirus concerns and robust US retail sales figures kept the ‘greenback’ in demand.

What’s coming up?

Looking ahead, the focus this week will be on the UK economy as GBP investors brace for some key UK economic releases.

At the start of the week the focus will be on the UK’s latest employment report, with the pound potentially facing some pressure as wage growth is forecast to have slowed in December.

For EUR investors the focus in the first half of the week will be on the latest ZEW economic surveys, with the euro potentially extending its losses on the expectation that coronavirus concerns will have dragged on German economic sentiment this month.

Meanwhile, US economic data is a little thin on the ground this week, potentially leaving US dollar movement to be largely dictated by market risk sentiment. This could mean further gains if coronavirus developments continue to spook investors.

Philip McHugh

Philip McHugh

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)

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