Pound (GBP) Weakened by Brexit Jitters
The Pound (GBP) fell back in the middle of the week, reversing its gains from Tuesday as renewed Brexit uncertainty weighed on Sterling sentiment.
Markets appear to be growing increasingly concerned about a possible no-deal Brexit at the end of 2020 thanks to some defiant rhetoric from both the UK and EU.
Coming up, the focus for GBP investors today will be on the publication of the UK’s mandate for trade negotiations with the EU.
The UK is likely to reiterate that it will reject all EU regulations post-Brexit, putting it on a collision course with the EU which seeks to ensure that any free trade deal is base around maintaining a ‘level playing field’.
Euro (EUR) Muted as Lagarde Renews Calls for Government Spending
The Euro (EUR) was mostly rangebound through yesterday’s trading session as European Central Bank (ECB) President Christine Lagarde repeated her call for Eurozone governments to do more to support growth in the bloc.
Lagarde touched on the coronavirus’ impact on an already weakened Eurozone economy and said that ‘fiscal measures intended to support the economy’ would be particularly welcome ‘under present circumstances’.
Looking ahead, we expect the Euro to weaken this morning if the Eurozone’s latest economic sentiment index reports a slump in business confidence this month.
US Dollar (USD) Mixed on Coronavirus Fears
The US Dollar (USD) initially rallied on Wednesday as demand for the safe-haven currency was buoyed by the continued risk-off trade centred on the ongoing coronavirus crisis.
This upswing in the ‘Greenback’ was also supported by a sharp turnaround in US Treasury bond yields, which contributed to the pressure on USD exchange rates earlier in the week.
However, USD exchange rates subsequently weakened after Donald Trump failed to ease concern over the coronavirus in a speech yesterday evening.
Looking ahead the US Dollar may struggle again today, with economists forecasting this afternoon’s US durable goods orders will reveal a sharp drop in order growth last month.
Canadian Dollar (CAD) Muted as Oil Prices Slump to One-Year Low
The Canadian Dollar (CAD) remained on the defensive yesterday, with the oil-sensitive ‘Loonie’ stumbling as WTI crude fell to $49 a barrel, its lowest level since January 2019.
Australian Dollar (AUD) Mounts Modest Recovery
The Australian Dollar (AUD) edged higher in overnight trade, with the ‘Aussie’ finding modest gains following a slip in the US Dollar (USD).
New Zealand Dollar (NZD) Buoyed by USD Weakness
The New Zealand Dollar (NZD) also ticked up overnight on Wednesday a weaker US Dollar gave the ‘Kiwi’ some room to breathe.