EUR/USD plunges to $1.16 as ECB warns of ‘very negative’ November

The euro extended its losses into its fourth consecutive session on Thursday after the European Central Bank (ECB) struck a bleak tone in its outlook for the Eurozone.
 
Meanwhile, after stumbling yesterday, the pound is holding its ground this morning, with GBP/EUR flat at €1.1068 and GBP/USD muted at $1.2927. GBP/CAD is rangebound at C$1.7231, while GBP/AUD and GBP/NZD hold steady at AU$1.8396 and NZ$1.9527, respectively.
 
Coming up, all eyes will be on the latest Eurozone GDP release this morning. But will it be enough to help pull the euro out of its slump?
 

What’s been happening?

The recent euro sell-off picked up a gear yesterday as a markedly dovish rate decision by the ECB added to the single currency’s recent woes.
 
While the ECB left its monetary policy untouched this month, EUR investors were unnerved by ECB President Christine Lagarde’s announcement that the bank would ‘recalibrate its instruments’ in its next meeting as well as her warning that growth in November will be ‘very negative’.
 
At the same time, we saw the US dollar extend its gains once again, as the ECB’s gloomy outlook and rising coronavirus jitters further soured the mood and saw investors continue to favour the safe-haven currency.
 
The ongoing deterioration in market sentiment also wasn’t effected by the latest US GDP figures, despite a record surge of growth in the third quarter.
 
The pound, meanwhile, ticked lower on Thursday as the absence of any positive Brexit news left the currency vulnerable to speculation the UK is headed towards a second lockdown.
 

What’s coming up?

Top of the agenda today will undoubtedly be the publication of the Eurozone’s third quarter GDP.
 
While economists are anticipating a rebound of growth in Q3, concerns over the impact of coronavirus on the fourth quarter may limit any upside potential in the euro.
 
Adding to the pressure on EUR exchange rates may also be the latest Eurozone CPI reading, which is expected to report the bloc continued to suffer from deflation in October.
 
In the UK, the focus is likely to remain on coronavirus developments, with the pound likely to remain under pressure as cases continue to spike.
 
Closing out the session will be the publication of the latest US PCE price index, with a bump in US inflation in September reinforcing the US dollar’s bullish run amidst souring market sentiment.