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.
Further data this week showed that German investor sentiment worsened in July, highlighting the bloc’s largest economy still has a long road to recovery.
The single currency started last week on the back foot after the European Commission slashed Eurozone growth forecasts from–7.7% to –8.7% and predicted the bloc’s recession could become even worse than first thought.
Meanwhile, France is expected to rebound in the second half of 2020, INSEE showed the country is still expected to suffer its worst recession since records began in 1948.
However, at the end of the week the currency was offered some support after Italy saw a strong rebound in industrial production. The euro also benefited as risk appetite slumped and traders opted for safer bets.
Looking ahead, trader attention will be focused on the upcoming European Central Bank (ECB) monetary policy meeting. A dovish ECB could weigh on the euro and send the currency lower if the monetary policy statement highlights further worries about the bloc’s recovery.
However, the latest Eurozone Consumer Price Index (CPI) could offer the single currency some support at the end of the week if inflation edges higher.
The bloc’s EU leaders’ summit at the end of the week will also be a main focus for investors as the Eurozone’s 27 leaders are expected to discuss the EU’s coronavirus recovery package.
If leaders are able to agree on a recovery package that appeases the ‘Frugal Four’, it will boost the euro.
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)