Pound to US Dollar Slips, GBP Exchange Rates Weaken as BoE Warns of Covid-19 Economic Scarring
The Pound to US Dollar exchange rate dipped yesterday, while Pound exchange rates generally were on the defensive yesterday. This came after Bank of England (BoE) Governor Andrew Bailey testified in front of Parliament’s Treasury Committee about the economic impact of the coronavirus pandemic.
Sterling sentiment weakened as Bailey spoke of the huge uncertainty of structural changes, the possible economic scarring of the outbreak, and that more would be needed to be done to tackle unemployment.
This led to the GBP/USD exchange rate briefly slipping back down to $1.32 yesterday. Meanwhile, the GBP/EUR exchange rate traded in a narrow range, holding close to the Pound’s eleven-week high against the Euro.
Turning to today’s session, GBP investors will look to today’s PMI figures for confirmation that the UK’s private sector boomed last month. But could concerns about the growing pace of job cuts limit any upside in the Pound?
Euro (EUR) Slips on Disappointing German Retail Sales
The Euro (EUR) ticked lower on Wednesday as the Eurozone’s recent economic gloom extended after the publication of the latest retail sales figures from Germany.
Yesterday’s figures reported a 0.9% fall in sales growth in July, missing the 0.5% expansion which had been forecast, while also revising June’s contraction down from -1.6% to -1.9%.
This led to the Euro to Dollar exchange rate continuing to drop, while EUR remained steady against the Pound.
EUR investors will be hoping that today’s retail release for the whole of the Eurozone will make for more positive reading as another miss could prompt more weakness in the Euro.
US Dollar (USD) Rebounds from Two-Year Low
The US Dollar (USD) struck higher through yesterday’s trading session, with the Dollar index erasing some of its recent losses after briefly striking a new two-year low on Tuesday.
USD investors appeared willing to look past a weaker-than-expected ADP employment report, likely in part due to the indicator’s recent decoupling from the more influential non-farm payroll figures.
This allowed USD/GBP and USD/EUR to strengthen ahead of Eurozone and UK final service sector PMIs that will likely drive Pound and Euro exchange rates.
Coming up today, the latest ISM non-manufacturing PMI release is likely to act as a key catalyst for the US Dollar. Will a stronger-than-expected services index help the ‘Greenback’ to extend its recovery?
Canadian Dollar (CAD) Buoyed Despite Dip in Oil Prices
The Canadian Dollar (CAD) ticked higher against most of its peers on Wednesday, with CAD investors shrugging off a modest dip in oil prices on the expectations the Bank of Canada (BoC) will maintain its relatively hawkish outlook at next week’s policy meeting.
Australian Dollar (AUD) Undermined by Weak Trade Figures
The Australian Dollar (AUD) ticked lower overnight on Wednesday, retreating in response to Australia’s disappointing trade figures as they revealed a shockingly large contraction in exports in July.
New Zealand Dollar (NZD) Maintains Gains
The New Zealand Dollar (NZD) continued to find support in overnight trade, with the ‘Kiwi’ continuing to benefit from the Reserve Bank of New Zealand’s (RBNZ) comments that it isn’t concerned by the NZD exchange rate.