Pound US Dollar Exchange Rate hits $1.27 , Euro undermined
The Pound strengthened in risk-on trade yesterday as Pound US Dollar exchange rates pushed past $1.27.
Meanwhile, the Euro dipped amidst profit taking after leaders agreed the EU coronavirus fund.
Coronavirus developments will likely continue driving markets as news on a vaccine buoy hopes for a global recovery. However, UK and US tensions with China may cap gains.
Pound (GBP) Rallies in Upbeat Trade
The Pound (GBP) maintained its upward trajectory through yesterday’s trading session as the increasingly risk sensitive currency was buoyed by upbeat market sentiment.
However, Sterling’s gains were also capped somewhat by concerns over how rising tensions between the UK and China could impact the country’s post-Brexit trade opportunities.
In the absence of any notable UK economic releases today, could we see lingering Brexit uncertainty begin to take its toll on GBP exchange rates?
Euro (EUR) Undermined by Profit Taking
The Euro (EUR) fell back on Tuesday as the single currency succumbed to some profit taking after EU leaders reached a landmark deal on its coronavirus recovery fund.
With the single currency having risen relentlessly in recent weeks on hopes of a deal, relief that an agreement has been reached saw some investors begin to unwind their positions in EUR.
Looking ahead, EUR investors will look to a speech from the European Central Bank’s (ECB) Luis de Guindos for fresh impetus today.
US Dollar (USD) Undermined by Market Optimism, Will Pound US Dollar Exchange Rate Rise?
The US Dollar (USD) trended lower yesterday as demand for the safe-haven currency continued to be buffeted by a tide of optimism which swept over markets. The increase in risk appetite caused Pound US Dollar exchange rates to hit a four-month high.
This appeared largely driven by hopes the EU coronavirus fund will help to shore up the global recovery as well as reports that another coronavirus vaccine has reached the third phase of testing.
Turning to today’s session, an expected rebound in US existing home sales last month may offer some support to the US Dollar this afternoon. However, in light of improving market sentiment any upside in USD is may prove limited and keep Pound US Dollar exchange rates strong.
Canadian Dollar (CAD) Rallies on Stronger Oil Prices
The Canadian Dollar (CAD) struck higher on Tuesday, with the appeal of the commodity linked ‘Loonie’ being bolstered as oil prices struck a new four-month high.
Coming up, we may see the Canadian Dollar extend these gains later this afternoon if domestic inflation is shown to have bounced back in June.
Australian Dollar (AUD) Skyrockets on Vaccine Hopes
The Australian Dollar (AUD) is currently trading at a one-year high as investors flock to the high-yield ‘Aussie’ as coronavirus vaccine hopes fuel risk-on trade.
New Zealand Dollar (NZD) Firms in Risk-On Trade
The New Zealand Dollar (NZD) also continued to trend higher overnight on Tuesday, with the ‘Kiwi’ finding support as market optimism lead to more bullish trade.