Today’s Currency Forecast: Euro (EUR) Exchange Rates Tumble as Eurozone GDP Suffers Record Contraction

Pound (GBP) Exchange Rates Cling to Highs Despite ‘Squeezing of the Brake Pedal’

Pound (GBP) exchange rates continued punching higher at the end of last week’s session despite the announcement that the UK government will be postponing the further easing of lockdown restrictions in England.

Boris Johnson announced that plans to reopen casinos and other venues will be postponed. While this could limit the chance of a v-shaped recovery, it failed to dent Sterling (GBP) sentiment.

Over the week ahead investors will be looking to the Bank of England’s (BoE) latest rate decision. While economists forecast no policy changes, any mention that policymakers may be looking at the possibility of negative interest rates having the potential to prove Pound-negative.

 

Euro (EUR) Exchange Rates Slip as Eurozone GDP Plunges

Euro (EUR) exchange rates closed last week on the back foot as the Eurozone reported a record slump in GDP in the second quarter.

Friday’s data revealed the Eurozone economy contracted 12.1% between April and June, plunging the bloc into a recession for the first time in seven years as the coronavirus crisis brought Europe to its knees.

Coming up, the focus for EUR investors at the start of the week will be Eurozone’s finalised manufacturing PMI for July. The report could boost Euro exchange rates if factory activity is revised higher.

 

US Dollar (USD) Exchange Rates Rally Amid Market Risk Aversion

US Dollar (USD) exchange rates mounted a tentative recovery on Friday, with investors favouring the safe-haven currency amid a souring of market risk appetite.

This upside in the ‘Greenback’ was aided by data showing that US consumer spending rose at a faster-than-expected pace in June and that domestic inflation also strengthened.

Looking ahead, the spotlight today is likely to be on the latest ISM manufacturing PMI. Will another acceleration in US factory growth help to buoy the US Dollar (USD)?

 

Canadian Dollar (CAD) Steady as GDP Beats Expectations

Canadian Dollar (CAD) exchange rates held their ground on Friday as the recent sell-off of oil was offset by a larger-than-expected rebound in domestic GDP in May.

 

Australian Dollar (AUD) Slips as ‘State of Disaster’ Called in Victoria

Australian Dollar (AUD) exchange rates open this week on the defensive as a state of disaster was declared in Victoria following a spike in coronavirus cases.

The Reserve Bank of Australia’s (RBA) latest policy meeting will take place overnight. Economists forecast that a dovish outlook from the bank would put pressure on the ‘Aussie’.

 

New Zealand Dollar (NZD) Undermined by Souring Market Mood

After slumping at the end of last week, New Zealand Dollar (NZD) exchange rates remained muted through Monday’s Asian session as coronavirus concerns weighed on market sentiment.

 

Matthew Andrews

Contact Matthew Andrews


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