GBP Dented by Dovish BoE and Brexit Talks, Pound to US Dollar and GBP/EUR Plunges
The Pound (GBP) fell at the end of last week against the US Dollar and Euro in response to dovish comments by Bank of England (BoE) policymaker Michael Saunders.
In a scheduled online speech made on Friday, Saunders warned that the UK faces a substantial rise in unemployment, while also suggesting that the BoE’s Brexit outlook may be too optimistic.
Sterling’s losses continued this morning over Brexit concerns, sending the Pound to US Dollar exchange rate plunging while GBP/EUR is also falling.
This came amidst reports Boris Johnson is to announce that the UK will walk away from trade talks on 15 October if a deal is not reached by then, and that the UK government is drawing up legislation to override part of the withdrawal agreement on Northern Ireland.
Euro (EUR) Slips as German Factory Orders Underperform
The Euro (EUR) found itself on the defensive on Friday after Germany’s latest factory order figures printed below expectations in July.
While orders continued to grow, they did so at a notably slower pace than had been forecast, fuelling fears that the Eurozone economic recovery is already stalling.
However, the Euro is strengthening against the Pound on Brexit reports with the GBP/EUR exchange rate falling.
Centre stage this week will be the European Central Bank’s (ECB) latest rate decision. No policy changes are expected from the ECB this week, but a new inflation forecast and potential hints of future stimulus may infuse volatility into the Euro.
US Dollar (USD) Rallies on Impressive Unemployment Figures, Pound to US Dollar Slips to $1.31
US Dollar (USD) exchange rates rallied on Friday, spurred higher by the latest US non-farm payroll release. This pushed the Pound to US Dollar exchange rate down, while EUR/USD remains flat.
While these showed that the US economy added slightly fewer jobs than expected in August, suggesting the labour market recovery is slowing, a sharp fall in the unemployment rate from 10.2% to 8.4% was enough to support the upside in the US Dollar.
Top of the agenda for USD investors this week will be the return of the US Senate from the summer recess. Another coronavirus relief package is currently in limbo and markets will be hoping for renewed urgency in talks when they resume.
Canadian Dollar (CAD) Bolstered by Full-Time Employment Numbers
The Canadian Dollar (CAD) closed out last week’s session on a high in response to Canada’s latest jobs figures.
While unemployment fell less than expected last month, CAD investors were cheered as the majority of the jobs added were for full-time positions.
Australian Dollar (AUD) Muted on US-China Trade Tensions
The Australian Dollar (AUD) opened this week’s session stuck in a narrow range as fresh US-China tensions on reports the US government will blacklist another major Chinese tech company undermined the appeal of the ‘Aussie’.
New Zealand Dollar (NZD) Struggles in Risk-Off Trade
The New Zealand Dollar (NZD) was on the back foot during today’s Asian trading session as some upbeat Chinese trade numbers were not enough to offset a weakening of market risk-appetite.