Pound to US Dollar Exchange Rate Slips amid Covid-19 Risks, GBP/EUR Holding
Pound (GBP) exchange rates were on the back back foot through yesterday’s trading session, with the Pound to US Dollar sliding to $1.28. Meanwhile, GBP/EUR weakened slightly but is holding at €1.09 this morning.
The Pound’s losses came amidst speculation over what coronavirus restrictions the UK is likely to face as the country wrestles with another spike in cases.
The government’s chief scientific and chief medical advisers warned that the UK could see 50,000 new coronavirus cases a day by mid-October unless stronger action is taken, stoking expectations of stricter restrictions which could disrupt the country’s economic recovery.
Boris Johnson is scheduled to make a statement in parliament later today, with GBP investors bracing for volatility as he likely announces new coronavirus restrictions.
This will likely put the Pound to US Dollar exchange rate under further pressure as investors look to the safe-haven USD.
Euro (EUR) Sinks as Europe Battles Second Wave
The Euro (EUR) was propelled lower on Monday as spiking coronavirus cases throughout Europe stoked fears that the momentum in the Eurozone’s economic recovery has faded.
However, the Euro held against the Pound with the GBP/EUR exchange rate slipping slightly due to the UK’s own worsening Covid-19 situation, in contrast the Euro to US Dollar fell sharply.
Also extending the pressure on the single currency were comments from European Central Bank (ECB) President Christine Lagarde as she acknowledged the bank is attentive to the euro’s appreciation.
Coming up, we are likely to see the Euro face fresh selling pressure later this afternoon if the Eurozone’s latest consumer confidence index indicates household sentiment deteriorated in September.
US Dollar (USD) Appreciates against the Pound and Euro in Risk-Off Trade
The US Dollar (USD) got off to a stellar start this week as a sell-off of equities and the threat of new lockdown measures across Europe stoked demand for the safe-haven ‘Greenback’.
This has led to the US Dollar to Euro exchange rate gaining a cent, and USD/GBP strengthening ahead of UK restriction announcements.
With the trajectory of the global recovery now increasingly in doubt, it’s likely we could see the US Dollar appreciate rapidly in the days to come.
Looking ahead, a key focus for markets today will be Jerome Powell’s testimony in front of Congress, in which the Federal Reserve Chair may offer more insight into the bank’s policy plans and its outlook for the economy.
Canadian Dollar (CAD) Holds Ground despite Falling Oil Prices
The Canadian Dollar (CAD) made some modest gains against the majority of its peers on Monday, despite crude oil prices getting caught up in the wider market sell-off prompted by renewed coronavirus concerns.
Australian Dollar (AUD) Slumps as RBA Desires Lower AUD
The Australian Dollar (AUD) fell back overnight on Monday, slipping on the back of comments from Reserve Bank of Australia’s (RBA) deputy governor Guy Debelle, who suggested that a lower AUD exchange rate would benefit the Australian economy.
New Zealand Dollar (NZD) Dented by Risk-Off Trade
The New Zealand Dollar (NZD) also retreated overnight, with the risk-sensitive ‘Kiwi’ struggling to find any support as market sentiment soured.