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Pound undermined by Brexit worries

Philip McHugh April 17th 2020 - 2 minute read

  • UK sticks to its guns on Brexit deadline
  • Total rise in US unemployment claims reaches 20 million
  • Euro flat as cracks in EU unity cause concern

 
Sterling struggles
 
The pound was on the back foot yesterday as a Downing Street spokesperson said that the UK will not seek any extension to the Brexit transition period.

This came shortly after the head of the IMF, Kristalina Georgieva, called on the UK and EU not to add to the ‘unprecedented uncertainty’ arising from the coronavirus crisis by refusing a delay to Brexit if needed.

As we head into the weekend GBP investors will remain focused on Boris Johnson’s recovery amid concerns of a leadership void whilst the Prime Minister remains at Chequers recuperating from his time in intensive care.
 
US unemployment surges again
 
The US dollar’s rally ran out of steam yesterday following the publication of the latest US initial jobless claims.
 
Thursday’s figures showed that unemployment claims rose by another 5 million last week, bringing the total rise in claims since the start of the coronavirus crisis to over 20 million, with USD investors fearing not all of these jobs will exist once the outbreak is under control.
 
As the week comes to a close the coronavirus crisis will continue dominating headlines and dictating market sentiment.
 
The US dollar will be best positioned to take advantage of this, with demand for the safe-haven currency likely to strengthen again so long as markets remain jittery over the prospect of a sharp global recession this year.
 
Euro struggles to find support ahead of inflation data
 
The euro struggled to find support on Thursday amid concerns that EU countries were failing to coordinate their strategies for lifting their coronavirus lockdowns.
 
So far most countries appear to be acting on their own, largely ignoring the guidelines published by the European Commission and reigniting fears about the cracks in EU unity which have come about due to the coronavirus crisis.
The only data of note today will be the Eurozone’s latest CPI figures, with the euro potentially struggling as March’s final figures are expected to confirm inflation slowed to a five-month low.
 
Upcoming Data:
 
Friday, 17th April 2020
10:00 EUR Eurozone Construction Output
15:00 USD Leading Index
 

Written by
Philip McHugh

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