Pound to Euro Strengthens on Cautious Brexit Optimism, GBP/USD Holds at $1.27
The Pound to Euro and US Dollar exchange rates closed yesterday’s European session a little higher, as GBP’s initial losses were reversed after the EU’s Chief Brexit Negotiator, Michel Barnier, said he ‘remains determined to strike a Brexit deal’.
This offset concerns over the UK’s new coronavirus restrictions and fears that the introduction of escalating measures over the next six months could extend the UK recession into the spring. Following these concerns, the Pound to US Dollar exchange rate had dipped as low as 1.26% while the Pound had also weakened against the Euro.
Looking ahead, the focus for GBP investors today will be on Chancellor Rishi Sunak’s ‘winter economy plan’ which will detail how the government will protects jobs through the coming months.
On top of Brexit optimism, the prospect of fiscal stimulus could raise the Pound to Euro exchange rate today while the Eurozone struggles with its own disappointing data and surge in coronavirus.
Meanwhile, the Pound to US Dollar exchange rate is holding at $1.27 after the safe-haven Dollar’s rally earlier in the week that pushed the GBP/USD exchange rate down two cents.
Euro (EUR) Slides as Eurozone Economic Activity Stalls
The Euro (EUR) was on the defensive on Wednesday following the publication of the Eurozone’s latest PMI release.
September’s preliminary figures revealed economic activity in the private sector only narrowly avoided coming to a standstill, adding to evidence that the Eurozone’s economic recovery has run out of momentum.
Coming up today, the Euro may experience additional pressure after the release of Germany’s latest business climate index. While sentiment improved on last month, the reading came in lower than forecast, disappointing investors that confidence failed to pick up further.
This has led EUR exchange rates to fall this morning as the Euro is slipping against the Pound and US Dollar, with GBP/EUR looking to rise from €1.09.
US Dollar (USD) Bolstered by Growth Concerns
The US Dollar (USD) retained its bullish momentum through yesterday’s trading session, with demand for the safe-haven currency continuing to climb in light of the souring market sentiment.
This comes amid heightened fears that we are now facing a second wave of coronavirus which could greatly disrupt the recovery in global growth.
Turning to today’s session, the spotlight for USD investors is likely to be on this afternoon’s initial jobless claims. Will another elevated rise in new claims last week undermine the US Dollar today?
Canadian Dollar (CAD) Stumbles as Trudeau’s Recovery Plan Fails to Impress
The Canadian Dollar (CAD) ticked lower on Thursday, with the ‘Loonie’ weakening after Prime Minister Justin Trudeau’s ‘ambitious’ recovery plan failed to impress markets.
Australian Dollar (AUD) Slips to Two-Month Low in Risk-Off Trade
The Australian Dollar (AUD) continued to retreat overnight on Wednesday, with the currency suffering its fifth consecutive day of losses as the risk-off tone saw investors shun the ‘Aussie’.
New Zealand Dollar (NZD) Retreats in Jittery Trade
The New Zealand Dollar (NZD) also trended lower in overnight trade as the appeal of the risk-sensitive ‘Kiwi’ was undermined by growing concerns over the global spread of coronavirus.