The pound struck lower again on Tuesday as the announcement of new coronavirus restrictions in the UK and a dire warning from Boris Johnson spooked investors.
Meanwhile, the pound is holding steady this morning, with GBP/EUR flat at €1.1051 and GBP/USD stable at $1.2478. GBP/CAD is buoyed at C$1.6939, while GBP/AUD and GBP/NZD tick up to AU$1.7974 and NZ$1.9087 respectively.
Coming up, will renewed coronavirus uncertainty drive fresh volatility in currency markets today?
What’s been happening?The euro rocketed at the start of this week’s session, accelerating against the majority of its peers thanks to some upbeat Eurozone economic data.
First up was Germany’s factory orders figures, which rose sharply in May following a record contraction the previous month.
These gains were then shored up by the latest retail sales figures from the Eurozone as sales growth skyrocketed in May to strike a new all-time high.
Trade in the pound, meanwhile, was mixed yesterday as Sterling struggled to find any strong directional bias.
This came in spite of some strong UK economic data, which revealed growth in the UK’s construction sector unexpectedly returned to growth last month.
Finally, the US dollar fell victim to improving market sentiment on Monday, which undermined demand for the safe-haven currency.
Not even some spectacular PMI figures revealing activity in the US service sector returned to pre-coronavirus levels last month proved enough to support USD exchange rates.
What’s coming up?Looking to today’s session, we may see concerns over the coronavirus begin to dominate trade once more as rising cases force some countries to re-introduce restrictions.
In light of these concerns, the US dollar may mount a comeback as investors turn to safe-haven assets.
This could prove particularly damaging for the increasingly risk-sensitive pound, with little to offer support to GBP as investors brace for Chancellor Rishi Sunak to publish the UK’s supplementary budget on Wednesday.
In the meantime, however, the euro looks set to extend its recent gains this morning after data published at the start of the European session revealed a sharp upswing in German industrial production in May.
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)