The Australian dollar trended lower through the majority of last week, with the risk-sensitive currency struggling to attract support as a gloomy market mood prevailed through most of the session.
Sterling is fluctuating this morning, with GBP/EUR edging up to to €1.1829 and GBP/USD fluctuating around $1.3022. GBP/CAD is lingering at C$1.7145 while GBP/AUD and GBP/NZD have crept up to AU$1.9269 and NZ$1.9939 respectively.
The Federal Reserve’s latest policy decision will be in the spotlight today, with USD investors looking to learn more about the bank’s economic outlook for the coming year.
What’s been happening?
The pound tumbled on Tuesday as Sterling sentiment was battered by both BoE rate speculation and renewed Brexit jitters.
In regards to the BoE, GBP investors appeared spooked by the uncertainty hanging over the bank’s rate decision on Thursday as the odds of the bank voting for a rate cut this week are now thought to be about 50-50.
Applying further pressure to the pound was the news that the next stage of Brexit negotiations will begin in March, leaving Boris Johnson with just 10 months to successfully negotiate a trade deal with the EU or risk the UK facing a cliff-edge Brexit.
Meanwhile, the US dollar continued to accelerate yesterday as growing concerns over the coronavirus fueled demand for the safe-haven currency, offsetting the publication of some mixed US data.
The continued strength of the US dollar also limited the appeal of its most traded currency partner yesterday, leaving the euro muted through most of Tuesday’s trading session.
What’s coming up?
Dominating the agenda today will be the conclusion of the Federal Reserve’s first policy meeting of 2020.
While no policy changes are expected from the Fed this month, we are still likely to see some movement in the US dollar in response to the bank’s forward guidance, with a cautious outlook from policymakers potentially weakening USD exchange rates.
For GBP investors the focus will remain on the BoE’s upcoming rate decision and the UK’s impending exit from the EU, both of which are likely to continue to weigh on Sterling sentiment.
Finally the euro may continue to struggle for direction today as German consumer confidence is expected to hold at a three-year low in February.
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)