Pound Euro Exchange Rate Drops, USD Supported by Souring Risk Appetite
The Pound Euro exchange rate weakened against EUR as Brexit jitters put pressure on GBP exchange rates, with the UK and EU still some way off a trade deal.
The US Dollar is finding support on a dip in risk appetite and hopes for US stimulus, while manufacturing and service PMIs show strong returns to growth in the UK and Eurozone.
Pound (GBP) Slumps as Brexit Talks Remain Deadlocked, Pushing Pound Euro Rates Lower
The Pound (GBP) trended lower through yesterday’s session as the latest round of Brexit trade talks between the UK and EU concluded without any significant progress being made.
The UK’s chief negotiator, David Frost, said there are still ‘considerable gaps’ between the sides on many issues, while his EU counterpart Michel Barnier suggested they are still ‘far away’ from a deal.
However, there is the potential for Sterling to mount a recovery today as the UK’s latest PMI figures highlighted the private sector returned to higher-than-expected growth this month.
Euro (EUR) Resumes Rally on EU Fund Optimism, EUR Rises Against GBP and USD
The Euro (EUR) maintained its upward trajectory on Thursday, with the single currency being underpinned by optimism regarding the EU’s coronavirus fund.
Capping the Euro’s gains, however, was the publication of the Eurozone’s latest consumer confidence index, which revealed a surprise deterioration in household sentiment this month.
Coming up, EUR exchange rates look poised to rally again today should the Eurozone’s own PMI figures point to a strong rebound in economic activity this month.
US Dollar (USD) Buoyed by US-China Tensions
The US Dollar (USD) ticked higher yesterday, with demand for the safe-haven ‘Greenback’ starting to pick up again in response to flaring tensions between the US and China.
Also contributing to the upside in USD were comments from US Treasury Secretary Steven Mnuchin in which he discussed the White House’s plan for another $1 trillion in coronavirus stimulus.
Looking ahead, the US Dollar could extend its recovery through the end of this week’s session if we see US-China tensions continue to undermine the recent market optimism.
Canadian Dollar (CAD) Flat as Oil Prices Slip
The Canadian Dollar (CAD) held in a narrow range on Thursday. The oil sensitive ‘Loonie’ found limited momentum as WTI crude prices dipped below $42 a barrel.
Australian Dollar (AUD) Slumps Despite Strong PMI Figures
The Australian Dollar (AUD) continued to trend lower overnight on Thursday, with some strong domestic PMI figures unable to offset growing market risk-aversion.
New Zealand Dollar (NZD) Undermined by Souring Market Mood
The New Zealand Dollar (NZD) also fell back in overnight trade as flaring US-China tensions reflected poorly on the risk-sensitive ‘Kiwi’.