The pound made fleeting gains on Thursday, driven by hopes for a solid economic rebound in the UK this year.
Sterling opens today’s session with some modest gains, with GBP/EUR ticking up to €1.1247 and GBP/USD buoyed at $1.3676. GBP/CAD is stable at C$1.7336, while GBP/AUD and GBP/NZD hold steady at AU$1.7616 and NZ$1.8990, respectively.
Looking ahead, the focus this morning will be on Germany’s budget announcement. Will the country’s spending plans be enough to impress EUR investors?
What’s been happening?The pound struck higher through the first half of yesterday, with the currency carrying over its momentum from the previous session, in which Bank of England (BoE) Governor Andrew Bailey poured cold water on negative rate speculation.
However, Sterling began to pare its gains by the end of the session following news that the UK had passed the grim milestone of 100,000 coronavirus related deaths after a record rise in daily deaths.
The euro, meanwhile, found itself on the defensive on Wednesday following comments from European Central Bank (ECB) President Christine Lagarde regarding the ECB’s concern over the strength of EUR exchange rates, as well as concerns over the unity of Italy’s coalition government.
At the same time, the US dollar firmed during yesterday’s trading session, bolstered by upbeat domestic inflation figures as risk appetite weakened.
These gains were further reinforced by US political uncertainty as the Democrats moved ahead with their attempt to impeach President Trump.
What’s coming up?In the spotlight at the start of today’s session we have the publication of Germany’s Budget for the coming year.
EUR investors will be looking to Germany to commit to massive fiscal stimulus this year to aid the country’s economic recovery from the coronavirus pandemic, potentially resulting in some weakness in the euro if today’s budget proves to be a let-down.
For GBP investors the focus will remain on UK coronavirus developments as the threat of stricter restrictions continue to hang over the pound.
Closing out today’s European session will be a speech from Federal Reserve Chair Jerome Powell, with USD investors likely to pay close attention to his language regarding the tapering of stimulus, with the US dollar potentially strengthening if he hints the Fed is open to winding down its quantitative easing programme.
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)