Pound (GBP) Buoyed ahead of UK’s Supplementary Budget
The Pound (GBP) ticked higher yesterday, with the UK currency holding its ground ahead of Rishi Sunak’s ‘summer update’ as well as benefiting from the weakness of some of its peers.
In today’s summer statement, the Chancellor will update the nation on the current state of the UK economy as well as outline new stimulus measures aimed at supporting the country’s post-coronavirus recovery.
This could bolster Sterling today if the new measures impress markets but could quickly cut the Pound’s recent rally short if the stimulus package proves underwhelming.
Euro (EUR) Weakened by Gloomy Forecasts
The Euro (EUR) fell back on Tuesday as the European Commission slashed its Eurozone growth forecast for 2020.
The EC now forecasts an 8.7% contraction of the Eurozone economy in 2020, down from its previous prediction of a 7.7% decline, whilst also warning of ‘exceptionally high’ downside risks which could see the Eurozone suffer an even worse recession than currently predicted.
Coming up, the focus for EUR investors today will be on a speech by the European Central Bank’s (ECB) Luis de Guindos. Will the ECB’s Vice-President offer any insight into the bank’s future policy plans?
US Dollar (USD) Steady on Easing Market Optimism
The US Dollar (USD) remained stable through yesterday’s trading session with fading market optimism helping the safe-haven ‘Greenback’ to mitigate some initial weakness.
Also helping USD exchange rates on Tuesday was the latest JOLT’s job figures, which revealed a larger-than-expected number of job openings in May.
Looking ahead, in the absence of any notable US economic data today, movement in the US Dollar is likely to remain driven by market sentiment regarding the coronavirus, potentially buoying USD exchange rates if second wave fears continue to grow.
Canadian Dollar (CAD) Dips as Oil Prices Stall
The Canadian Dollar (CAD) edged lower on Tuesday, with the commodity linked currency losing ground as oil prices stalled amidst fears that a recovery in global demand will be hampered by a coronavirus reemergence.
Australian Dollar (AUD) Stumbles as Melbourne Returns to Lockdown
The Australian Dollar (AUD) retreated overnight on Tuesday, with investors steering clear of the ‘Aussie’ as over five million residents of Melbourne city went back into lockdown following a surge in local coronavirus cases.
New Zealand Dollar (NZD) Dented by Easing Risk-On Mood
The New Zealand Dollar (NZD) also trended lower overnight, with concerns over a coronavirus resurgence combined with rising geopolitical tensions limiting the appeal of the risk-sensitive ‘Kiwi’.