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 on the back foot this morning, with GBP/EUR muted at €1.1048 and GBP/USD subdued at $1.2528. GBP/CAD and GBP/NZD are rangebound at C$1.7063 and NZ$1.9186 respectively, while GBP/AUD slides to AU$1.8041.
Coming up, will we see Sterling remain on the defensive today in the wake of the UK’s latest GDP figures?
What’s been happening?The euro roared higher at the start of this week’s session, with EUR investors cheering a new report from Germany’s government on its outlook for the Eurozone’s largest economy.
Germany’s government suggests that its economy has now ‘passed its lowest point’ after falling into a recession in the first half of 2020 in response to the coronavirus crisis, and that the country is now well on its way to recovery.
At the same time, the pound tumbled through yesterday’s session in response to ongoing Brexit jitters. GBP investors are growing increasingly concerned that July’s ‘intensified’ talks will fail to break the deadlock in trade talks.
The US dollar, meanwhile, was left muted on Monday as demand for the safe-haven currency was undermined by fresh market optimism, amidst reports that Gilead’s antiviral drug, remdesivir, helped to reduce coronavirus fatalities in trials and reports that a COVID-19 vaccine could be approved by the end of 2020.
What’s coming up?Looking ahead to today’s session, there are some notable data releases which are likely to infuse some volatility into currency markets.
First up is the UK’s latest monthly GDP release, with data published at the start of the European session putting some pressure on the pound after revealing that UK economic growth was weaker-than-expected in May.
Across the Channel, the focus will be on the latest ZEW economic surveys, with the euro potentially facing some headwinds this morning if they reveal economic sentiment in the Eurozone weakened this month.
Finally, we have the publication of the latest US consumer price index later this afternoon. Will an uptick in US inflation last month help to bolster USD exchange rates?
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)