Pound stumbles on fears for UK GDP
Currencies Direct March 31st 2020 - 2 minute read
- Stronger UK mortgage approvals figure fails to boost pound
- Euro stumbles as Eurozone confidence continues decline
- US dollar shakes off plunge in Dallas Fed manufacturing index
Covid-19 worries keep pound under pressure
The pound lacked direction at the start of this week’s session, with the currency’s recent rally running out of steam in the wake of some dire economic forecasts for the UK.
Analysts at the Centre for Economics and Business Research (CEBR) suggest the UK economy could shrink by as much as 15% in the second quarter of 2020 due to the coronavirus lockdown.
Today investors will be focused on the government’s response to coronavirus amid speculation more restrictive measures could be imposed as the number of infections rises.
Euro braces for fresh volatility on Eurozone inflation data
March’s Eurozone economic sentiment index left the euro on the back foot as confidence weakened significantly on the month.
The index’s drop from 103.4 to 94.5 added to bets that the economy is in line for a major downturn, one which it may struggle to rapidly recover from.
In focus this morning will be Germany’s latest employment report. The data will provide EUR investors with their first insight into how the jobs market in the Eurozone’s largest economy is faring.
Weaker Chicago PMI set to limit US dollar gains
While the Dallas Fed manufacturing index saw a dramatic plunge from 1.2 to -70 this was not enough to knock the US dollar off a positive footing.
Even though the US manufacturing sector appears to have experienced a major slowdown in the last month the general sense of safe-haven demand kept USD exchange rates trending higher.
However, another underwhelming performance from the Chicago purchasing managers index could see the US dollar stumble this afternoon.
Mounting evidence of a loss of momentum within the US economy may limit the US dollar’s ability to gain fresh ground.
Upcoming Data:
Tuesday, 31st March 2020
10:00 EUR Eurozone Consumer Price Index
13:30 CAD Gross Domestic Product
14:45 USD Chicago Purchasing Managers Index
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Currencies Direct