The euro fell sharply yesterday in response to forecasts the Eurozone economy is set to shrink up to 8.7% in 2020.
After falling on Wednesday, the pound is stuck in a narrow range this morning, with GBP/EUR muted at €1.1142 and GBP/USD flat at $1.2272. GBP/CAD is stable at C$1.6878, while GBP/AUD and GBP/NZD hold steady at AU$1.8538 and NZ$1.9819 respectively.
In the spotlight today we have the latest US durable good figures. Will a new record drop in orders dampen demand for the US dollar?
What’s been happening?
The euro came out on top on Wednesday as the European Commission released details of a €750bn relief fund to help support growth after the coronavirus crisis.
Hailed as ‘Europe's moment’ by EC President Ursula von der Leyen, the ambitious fiscal plan will see each EU member state offered support through grants and loans. EUR investors hope this will allow the Eurozone economy to bounce back from the coronavirus crisis in the coming months.
The US dollar also strengthened through yesterday’s trading session as growing tensions between the US and China bolstered the appeal of the safe-haven currency, with Beijing vowing to hit back at the US for any action taken against China over its Hong Kong security law.
Meanwhile, the pound retreated on Wednesday as a Downing Street spokesperson reiterated the government's commitment to exiting the Brexit transition period in December, stoking concerns for a no-deal Brexit.
What’s coming up?
Looking ahead, the US dollar is in focus today with the publication of the US durable goods figures.
Economists forecast good orders will have suffered their worst contraction on record last month as demand was curtailed by the coronavirus crisis.
Further limiting the appeal of the ‘greenback’ this afternoon may be the latest initial jobless report as US unemployment is expected to have surged by another two million last week.
The euro could also face some pressure today as the Eurozone’s business confidence index is expected to report economic sentiment remained close to a decade low in May.
Finally, the pound is likely to continue to struggle to find support in the absence of any notable data as Brexit and the political furore over Boris Johnson’s aide Dominic Cummings remains in the spotlight.
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)