The US dollar fell to two-week lows against its major rivals yesterday after concerns over the US economy’s resilience sapped USD demand.
Sterling looks to be rallying again this morning, with GBP/EUR climbing to €1.0853 and GBP/USD steady at $1.1613. GBP/CAD has jumped to C$1.6774, while the GBP/AUD and GBP/NZD have appreciated to AU$2.0071 and NZ$2.0533 respectively.
Expect to see more currency volatility this week markets remain gripped by coronavirus panic.
What’s been happening?
The pound sought to mount a recovery at the end of last week’s session, soaring through the European session in anticipation of additional coronavirus stimulus measures from the UK government.
These measures proved to be the government’s most ambitious yet, with Chancellor Rishi Sunak unveiling a plan which will see the government cover up to 80% of wages in the private sector, in an effort to protect jobs from coronavirus shutdowns.
However, Sterling was ultimately unable to sustain its gains, as in his daily coronavirus briefing, Boris Johnson announced further restrictions to economic activity.
At the same time, the euro struggled to find momentum on Friday, with EUR investors growing increasingly frustrated by the EU’s lack of a coordinated stimulus plan.
Meanwhile, after roaring higher through much of the week, the US dollar finally ran out of steam at the end of last week’s session, dipping through the European trading session as it was undermined by a bout of profit taking.
What’s coming up?Looking to the week ahead, investors will be bracing for further volatility as the coronavirus crisis continues to dominate market sentiment.
Expect this to mostly benefit the US dollar as investors continue to pile into the safe-haven currency amid the heightened uncertainty.
Meanwhile the release of March’s preliminary PMI figures for the UK, Eurozone and US, will give investors their first insight into how the private sector is faring during the crisis, and may prompt some significant currency movements in the first half of the week, if some particularly sharp contractions in activity are reported.
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)