Falling UK consumer confidence set to knock pound off uptrend
Philip McHugh March 30th 2020 - 2 minute read
- Covid-19 worries continue to limit pound upside
- Euro under pressure ahead of Eurozone business confidence index
- Safe-haven demand fails to shore up US dollar
Pound braces for weaker consumer confidence
News that Boris Johnson had tested positive for Covid-19 saw the pound falter on Friday, although it remained on a generally positive footing.
While fears of potential political disruption quickly faded confidence in the outlook of the UK economy remains generally muted.
With forecasts pointing towards a fresh drop in the GfK consumer confidence index for March the mood towards the pound could sour tonight.
As long as consumers show increased anxiety in the face of the ongoing crisis the pound may struggle to find any fresh traction.
Eurozone business sentiment decline set to drive euro lower
The euro remained on the back foot as both Spain and Italy continued to struggle under the weight of the Covid-19 crisis.
As the Eurozone business confidence index looks set to show another monthly decline this morning EUR exchange rates could shed further ground.
Any fresh indication that the currency union remains on course for a weak first quarter gross domestic product performance may keep the single currency under pressure.
Unless businesses start to show signs of cautious optimism the mood towards the euro is unlikely to see an improvement in the near term.
US dollar fails to benefit from global economic anxiety
The US dollar took another beating on Friday, leading the ‘Greenback’ to suffer its worst week of trade in over a decade.
Friday’s slump appeared driven by easing concerns over USD liquidity, as well as a slump in US treasury yields, and came despite the US House of Representatives finally approving a massive $2.2 trillion stimulus package.
This plunge in the US dollar appeared to mostly benefit the pound, which continued to recoup its losses from the previous week.
The USD sell-off may carry over into this week, as efforts by the Federal Reserve and other central banks to free up their cash reserves continue to quells fears of a potential USD shortage.
Also in focus for USD investors will be the highly influential non-farm payrolls report later in the week, which is expected to confirm a dramatic plunge in employment growth in March.
Upcoming Data:
Monday, 30th March 2020
09:00 EUR Eurozone Business Confidence
14:30 USD Dallas Fed Manufacturing Index
23:01 GBP GfK Consumer Confidence Inde
Written by
Philip McHugh