Today’s Currency News: Pound Subdued as BoE Warns UK Faces Deepest Contraction in History

Pound (GBP) Muted on Grim BoE Forecasts

The Pound (GBP) struggled to find support in the tail end of last week’s session, in response to the Bank of England’s (BoE) latest policy meeting.

While GBP investors welcomed hints from the BoE that it is prepared to expand its stimulus programme, this was not enough to offset the bank’s gloomy forecasts, in which it warned the UK faces its worst economic slowdown in history.

Looking to the week ahead, the focus for GBP investors will be on the UK’s GDP release on Tuesday, where a dramatic drop in first quarter growth is likely to limit any upside in Sterling.

Euro (EUR) Dented by Abysmal German Industrial Data

The Euro (EUR) was also left directionless in the second half of last week following the publication of Germany’s latest industrial production figures.

These revealed factory output plummeted from 0.3% to an all-time low of –9.2% in March as Germany’s coronavirus lockdown came into effect.

The depressing data bodes poorly for Germany’s upcoming GDP figures, where a sharp slump in first quarter growth is likely to weigh on the Euro later in this week’s session.

US Dollar (USD) Dented by Risk-On Trade

The US Dollar (USD) stumbled in the latter half of last week as demand for the safe-haven currency was trimmed amidst a modest improvement in market sentiment.

This was not helped by the latest US payroll release on Friday, which revealed US unemployment rocketed up by over 20 million in April.

Turning to this week’s session, the main catalyst of movement in USD exchange rates looks to be the latest US CPI figures. Will a plunge in inflation weaken the US Dollar?

Canadian Dollar (CAD) Surges as Oil Prices Jump

The Canadian Dollar (CAD) popped on Thursday, as demand for the oil-sensitive currency strengthened after WTI crude prices surged above $26 a barrel.

The ‘Loonie’ then consolidated these gains on Friday as Canada’s jobs report came in slightly stronger than expected, with unemployment rising to 13% in April against forecasts it would surge to 18%.

Australian Dollar (AUD) Strengthened by Positive Sentiment

The Australian Dollar (AUD) shot higher through the latter half of last week, with the risk-sensitive ‘Aussie’ being buoyed by an improvement in market sentiment.

New Zealand Dollar (NZD) Buoyed by Coronavirus Hopes

The New Zealand Dollar (NZD) also trended higher towards the end of last week, as hopes that more countries will reopen their economies helped to improve the market mood.

Matthew Andrews

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