Pound to Euro Fluctuates on Mixed Brexit Headlines
The Pound (GBP) experienced some dramatic swings in movement yesterday as a slew of Brexit headlines rocked the Pound against the Euro and US Dollar.
This initially manifested in a sharp drop in GBP exchange rates in the morning, after the EU formally launched legal action against the UK in retaliation to the UK government’s plans to breach the Withdrawal Agreement.
However, Sterling rebounded quickly following reports from the Financial Times that the UK and EU were close to reaching a post-Brexit trade deal after positive progress towards an agreement on state aid.
Looking ahead, the focus for GBP investors today will undoubtedly remain on Brexit, with significant upside potential in the Pound if headlines remain positive.
So far this morning, GBP exchange rates are pushing higher, with the Pound making solid gains against the Euro and GBP/USD hitting $1.29.
Euro (EUR) Flat as Eurozone Unemployment Rises
The Euro (EUR) held in a narrow range through Tuesday’s European session as the Eurozone’s latest jobs figures reported unemployment in the bloc rose to 8.1% in August.
This offset any potential gains in the single currency stemming from its negative correlation with the US Dollar (USD), which weakened yesterday.
However, the Euro may struggle to hold its ground through today’s session as the Eurozone’s consumer price index is expected to report the bloc suffered another month of deflation in September.
Additionally, the Euro could suffer further losses against the Pound and US Dollar today as risk-off trade boosts USD safe-haven demand.
US Dollar (USD) Slumps amid Upbeat Trade before Trump Coronavirus Diagnosis
The US Dollar (USD) trended lower yesterday, with demand for the safe-haven currency curtailed by risk-on trade amid hopes for a new US stimulus package.
Further undermining the appeal of the ‘Greenback’ was the publication of the latest ISM manufacturing PMI as it reported US factory activity unexpectedly slowed last month.
Turning to today’s session, the news overnight that US President Donald Trump tested positive for coronavirus sent markets retreating, offering support to safe-haven USD.
Also likely to drive US Dollar movement today is the release of the highly influential US non-farm payroll figures. If it reports a healthy number of jobs were added to the US economy last month it could offer some support to the US Dollar.
The loss of risk appetite has left USD trading higher at the start of the day. However, the Pound to US Dollar exchange rate bucking the trend ahead of more Brexit negotiations today and tomorrow.
Looking ahead, US Dollar exchange rates could experience more volatility later as market react to the fading hopes of a coronavirus stimulus package after the US House failed to pass a bipartisan deal.
Canadian Dollar (CAD) Retreats as Oil Prices Slip
The Canadian Dollar (CAD) was on the defensive on Thursday, with investors shunning the commodity-linked ‘Loonie’ as WTI oil prices tumbled 2% to $39 a barrel. Oil prices fell even further overnight following the news regarding Donald Trump.
Australian Dollar (AUD) Falls in Risk-Off Trade
The Australian Dollar (AUD) suffered from souring market sentiment which followed the news US President Donald Trump has coronavirus.
Added to this, Australian retail sales fell -4%, slightly better than expected but still weighed on AUD exchange rates.
New Zealand Dollar (NZD) Loses Gains on Souring Market Sentiment
The New Zealand Dollar (NZD) is also suffering from the effects of a loss of risk appetite this morning as markets retreat.