Pound (GBP) Rallies on UK GDP Figures
The Pound (GBP) trended higher against the majority of its peers yesterday as markets reacted to the UK’s latest GDP release.
While Tuesday’s figures revealed the UK economy slowed to a standstill in the last quarter of 2019, it also showed that growth in 2019 as a whole was slightly stronger than expected.
Sterling may struggle to maintain its momentum today in the absence of any notable UK data, particularly if the focus turns back to Brexit.
Euro (EUR) Subdued as ECB’s Lagarde Defends Ultra-Loose Monetary Policy
The Euro (EUR) was mostly muted on Tuesday in response to European Central Bank (ECB) President Christine Lagarde’s speech before the European Parliament.
Lagarde defended the ECB’s ultra-loose monetary policy, stating it remains vital for ‘shielding the Eurozone economy from global headwinds’, and repeated calls for more government spending to support the bank’s measures.
Looking ahead, the publication of the Eurozone’s industrial production figures could exert pressure on the Euro this morning as economists forecast a sharp slump in factory output in December.
US Dollar (USD) Slips on Powell Testimony
The US Dollar (USD) was placed on the back foot yesterday, with the currency weakening in response to Federal Reserve Chair Jerome Powell’s testimony in front of US Congress.
Addressing the House financial services committee on the Fed’s monetary policy, Powell warned that ‘risks to the outlook remain’ and the coronavirus outbreak in China could disrupt the US economy and prompt the need for additional monetary easing.
Powell’s testimony will continue today but is likely to have a limited impact on the US Dollar.
Instead, movement in USD exchange rates may be dictated by coronavirus developments, with another fall in new infections likely to limit the appeal of the safe-haven US Dollar.
Canadian Dollar (CAD) Steady as Oil Prices Rebound
The Canadian Dollar (CAD) edged higher on Tuesday as the oil-sensitive currency was buoyed after WTI crude priced rebounded back above $50 a barrel.
Australian Dollar (AUD) Buoyed as Coronavirus Fears Ease
The Australian Dollar (AUD) trended higher overnight, propelled upward on a fresh wave of risk appetite on hopes that the coronavirus won’t be too damaging to global growth.
New Zealand Dollar (NZD) Roars Higher on Hawkish RBNZ
The New Zealand Dollar (NZD) surged overnight on Tuesday as markets reacted to the Reserve Bank of New Zealand’s (RBNZ) first rate decision of 2020.
Leaving rates on hold at 1%, the RBNZ struck a decidedly upbeat tone with its forward guidance, suggesting the risk posed by the coronavirus outbreak will be short lived and that the New Zealand economy will likely bounce back in the second half of 2020.