Pound (GBP) Dented by Brexit Jitters
The Pound (GBP) was placed on the back foot again on Wednesday as renewed Brexit uncertainty weighed on Sterling sentiment.
This followed comments from Foreign Secretary Dominic Raab, who said the government still has ‘no intention’ of extending the Brexit transition period in spite of the coronavirus crisis.
Looking ahead, the question of the UK’s lockdown exit strategy is likely to remain the main focus for GBP investors, with any upside in the Pound likely to be capped so long as the government remains reluctant to begin easing restrictions.
Euro (EUR) Poised to Fall on GDP Slump
The Euro (EUR) edged higher during yesterday’s session, but found its gains capped as markets braced for Thursday’s key economic releases.
It’s set to be a busy session for EUR investors, with both the Eurozone’s first quarter GDP figures and the European Central Bank’s (ECB) latest rate decision in focus.
First up will be the GDP release, where a sharp contraction of growth in the first quarter is likely to hurt the Euro.
Meanwhile, while the ECB is not expected to make any policy changes today, the bank’s forward guidance may offer EUR investors some clues as to whether it may be willing to introduce more stimulus in the future if EU leaders remain unable to agree on a coordinated fiscal policy.
US Dollar (USD) Pressured by Dire GDP Reading
The US Dollar (USD) came under fire on Wednesday after US GDP figures revealed US economic growth contracted by a whopping 4.8% in the first quarter.
This was the largest contraction since the last quarter of 2008 and brought an end to the longest period of expansion in US history.
The ‘Greenback’ then came under further pressure following the Federal Reserve’s rate decision after the bank struck a decidedly dovish tone in its forward guidance.
The publication of last week’s initial jobless claims could deal the US Dollar another blow today as analysts predict a further sharp rise in unemployment.
Canadian Dollar (CAD) Strengthens as WTI Crude Climbs Above $15
The Canadian Dollar (CAD) trended higher through yesterday’s session, with the continued recovery in US oil prices helping to bolster the appeal of the commodity-linked ‘Loonie’.
However, with oil prices growing increasingly volatile it remains to be seen if this upswing will last, with the Canadian Dollar’s gains set to reverse as soon as crude begins to slip again.
Australian Dollar (AUD) Buoyed by Coronavirus Drug Hopes
The Australian Dollar (AUD) drifted higher against most of its peers on Wednesday as reports of successful trials of a new drug to treat the coronavirus saw investors go risk-on.
New Zealand Dollar (NZD) Strengthens in Risk-On Trade
The New Zealand Dollar (NZD) also appreciated yesterday on hopes the anti-viral drug Remdesivir will help in the fight against the coronavirus and allow countries to begin reopening their economies.