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.
Sterling is steady this morning, with GBP/EUR rangebound at €1.0973 and GBP/USD firm at $1.2865. GBP/CAD is muted at C$1.7202, while GBP/AUD and GBP/NZD are holding steady at AU$1.8028 and NZ$1.9339, respectively.
With a lack of economic data today, the broad weakness in the US dollar may continue supporting the pound and euro.
What’s been happening?The pound strengthened on weakness in the US dollar yesterday as Sterling firmed at a five-month high of $1.28 against USD.
However, Brexit trade talks uncertainty and a lack of economic data to drive movement limited the pound against other currencies.
Sterling came under more pressure from fears of a second wave of coronavirus as the UK introduced quarantine rules on travelers arriving from Spain.
The euro’s rally continued yesterday as optimism from the EU recovery fund agreed last week kept euro exchange rates buoyed.
Weakness in the US dollar pushed the single currency to a 20-month high while a jump in Germany’s business climate index added to optimism of a quick economic recovery in the Eurozone’s largest economy.
Meanwhile, US dollar exchange rates continued plummeting as US diplomatic staff left the US consulate in Chengdu. On top of US-China tensions, rising US coronavirus cases and the gloomy economic outlook in the US have eroded the US dollar’s status as a safe-haven currency.
What’s coming up?In the absence of economic data, the pound may find some support today as reports emerged that the EU’s chief negotiator, Michel Barnier, expressed confidence a deal can be reached with Britain, in contrast to comments last week. However, it appears a long way to go before a UK-EU agreement is reached.
Any Sterling gains may be tempered, however, if reports are accurate that Boris Johnson warned businesses to expect a second coronavirus wave in the autumn.
Meanwhile, the euro is likely to hold its gains as the optimism in the Eurozone keeps the single currency buoyed.
The US dollar may struggle through today’s session. A lack of significant economic data, rising coronavirus cases hampering the economy, and US-China tensions simmering continue to weigh on the ‘Greenback’ and its safe haven status.
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)