Pound (GBP) Exchange Rates Struggle as UK Enters Recession, GDP Increase in June Limits Downside
The Pound (GBP) was muted through yesterday’s trading session as the UK’s latest jobs report made for mixed reading.
While the unemployment rate held steady in June, employment fell by its largest amount in over a decade, while wage growth also shrank rapidly.
Meanwhile, Sterling continues to struggle this morning in the wake of the UK’s latest GDP estimate. Also, chancellor Rishi Sunak warned of ‘hard times’ after the data release.
Today’s figures revealed that the UK economy shrank by a record 20.4% in the second quarter, plunging the UK into its first recession in over a decade.
However, the data showed that GDP did rise 8.7% in June. This suggests the economy is starting to recover and may limit GBP exchange rates downside today.
Euro (EUR) Buoyed against USD by ZEW Surveys, EUR/GBP Steady
The Euro (EUR) edged higher on Tuesday, carried higher by the latest ZEW survey from Germany, which reported economic sentiment in the country roared to a new 16-year high in August.
However, the upbeat data only provided modest gains for Euro exchange rates amidst worries that the coronavirus situation in Europe continues to deteriorate.
Looking ahead, the Euro may maintain its upward trajectory through today’s session as the Eurozone’s latest industrial production rallied. This morning’s figures showed factory output jumped by 9.1% month-on-month in June. While the Pound to Euro exchange rate is steady so far today, this jump may support EUR sentiment.
US Dollar (USD) Retreats in Upbeat Trade,
The US Dollar (USD) crept lower again yesterday as upbeat market sentiment tempered appetite for the safe-haven ‘Greenback’.
Donald Trump appeared to trigger optimism after announcing he is ‘seriously’ considering a capital gains tax cut to help boost economic growth and create more jobs.
Coming up, we may see the US Dollar strengthen later this afternoon if today’s consumer price index reports that US inflation continued to accelerate through July.
Canadian Dollar (CAD) Supported by Bullish Oil Prices
The Canadian Dollar (CAD) rallied on Tuesday, with the commodity-sensitive ‘Loonie’ spurred higher by another uptick in oil prices, which pushed WTI crude back near $43 a barrel.
Australian Dollar (AUD) Slips on Underwhelming Wage Data
The Australian Dollar (AUD) ticked lower overnight on Tuesday as a weaker-than-expected domestic wage price index disappointed AUD investors.
Worryingly, wage growth almost ground to a halt in the second quarter, stoking concerns that weaker household spending power will hamper the country’s economic recovery.
New Zealand Dollar (NZD) Slumps on Dovish RBNZ Rate Decision
The New Zealand Dollar (NZD) took a dive overnight in the wake of the Reserve Bank of New Zealand’s (RBNZ) latest rate decision.
While the RBNZ opted to leave rates on hold this month, it clearly left the door open to slash interest rates to negative in the future by considering all policy options.