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GBP/EUR extends losses as technical correction continues

currency-newsGBP/EUR extends losses as technical correction continues
The pound’s decline continued through yesterday’s session as the technical correction in its position fuelled GBP losses.
The pound appears steadier this morning with GBP/EUR holding at €1.1571 and GBP/USD recovering at $1.3743. GBP/CAD is also steady at C$1.7333, while GBP/AUD and GBP/NZD are slipping at AU$1.8010 and NZ$1.9554, respectively.
Following the publication of the Federal Reserve’s meeting minutes yesterday, the subsequent risk-on mood and a speech by Fed Chair Jerome Powell later today look set to drive market movement.

What’s been happening?

The pound extended its losses through yesterday’s session, with a technical correction appearing to continue being the main cause of Sterling’s decline.
Further pressure on GBP exchange rates came from doubts over the AstraZeneca vaccine following the UK drugs regulator’s recommendation that under 30s should be offered an alternative vaccine in the UK.
Sterling had found support and briefly limited its losses at the start of the session after the UK services PMI indicated growth in March for the first time since October 2020 with a reading of 56.3, although lower than the 56.8 forecast.
Meanwhile, the euro strengthened again during Wednesday’s session as upwardly revised PMI data indicated Eurozone business activity returned to growth in March.
Although the services PMI came in at 49.6, slightly below the 50 mark indicating growth, previously published strong manufacturing growth pushed private sector activity into expansion.
The US dollar was subdued through much of yesterday’s European session as US Treasury yields steadied and investors awaited the Federal Open Market Committee (FOMC) meeting minutes. 
As the FOMC echoed its dovish stance and reiterated that it is too early to consider tapering quantitative easing while remaining committed to supporting the US economy, USD exchange rates came under pressure as risk appetite increased and weighed on safe-haven demand for the ‘Greenback’.

What’s coming up?

Looking ahead, the pound looks to steady today after suffering from profit taking through this week and an upbeat market mood returns after the Fed reiterated its commitment to longer support.
GBP exchange rates could also receive support after the UK began using the Moderna vaccine for the first time, which looks set to keep the UK’s lockdown easing on track as the country has 17 million doses ordered.
At the same time, the euro could lose its bullish momentum as the same AstraZeneca vaccine concerns in the UK look set to harm public confidence in the vaccine in the EU, potentially delaying the speed of Europe’s vaccination programme and economic recovery.
In addition, news that Germany is considering extending its lockdown could also weigh on EUR sentiment.
USD investors will focus on a speech from Fed Chair Jerome Powell later today for confirmation of the Fed’s dovish message.
Meanwhile, initial jobless claims are forecast to fall below 700,000 for the week ending April 2, which could offer the US dollar support later, however the risk-on mood driven by the Fed’s meeting minutes looks set to weigh on USD exchange rates.
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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