GBP Gains despite Tier Restrictions, Pound to Euro at One-Month High
The Pound to Euro exchange rate ticked higher to a month high yesterday, firming after Boris Johnson outlined a new tier based coronavirus restriction system.
Strengthening Sterling sentiment appeared tied to relief that most areas of the UK avoided the highest tier of the Covid Alert Levels system, as well as Johnson’s reassurance the UK will not face a second lockdown.
This pushed GBP exchange rates higher across the board, while the Pound to US Dollar firmed, holding at $1.30.
Kicking off today’s session was the publication of the UK’s latest employment figures.
The data highlighted the fallout from the Covid-19 crisis, reporting a rise in the unemployment rate to 4.5%, stalling wage growth in August, and a record rise in redundancies in the last three months.
But will the impact on Pound exchange rates prove limited as the impending Brexit deadline preoccupies GBP investors?
Euro (EUR) Undermined by Coronavirus Worries
The Euro (EUR) was on the back foot on Monday as countries in Europe look to implement stricter restrictions as coronavirus cases on the continent skyrocket.
This in turn is fuelling concerns over the Eurozone’s economic rebound as analysts warn that more restrictions will further derail the bloc’s already fragile recovery.
Meanwhile, EUR exchange rates will likely continue coming under pressure today as the latest ZEW surveys appear to highlight the deteriorating mood.
The surveys this morning showed far weaker-than-expected economic sentiment in Germany and the Eurozone, with investors voicing concerns over the sharp rise in coronavirus cases and Brexit.
This will likely add to the Pound to Euro exchange rate strength, while also appearing to drive some downward movement in EUR/USD.
US Dollar (USD) Firms Following US Stimulus Setback
The US Dollar (USD) edged higher at the start of this week’s session as House Speaker Nancy Pelosi rejected the Trump administration’s latest stimulus proposal over the weekend, souring the market mood.
However the ‘Greenback’ struggled to really capitalise on the risk-off tone as a US holiday and closure of domestic markets resulted in thin trading conditions in the US Dollar.
This allowed the Pound to US Dollar exchange rate to push higher, while USD/EUR held in a narrow range.
Coming up today, the focus for USD investors will be on the US consumer price index. Will another bump in inflation last month offer some support to the US Dollar later this afternoon?
Canadian Dollar (CAD) Stalls as Oil Prices Fall
The Canadian Dollar (CAD) traded in a narrow range through Monday’s trading session as US oil prices slipping back below $40 a barrel undermined the appeal of the commodity-linked ‘Loonie’.
Australian Dollar (AUD) Tumbles as China Reportedly Halts Coal Exports
The Australian Dollar (AUD) fell sharply in overnight trade on Monday amidst reports that China had frozen coal imports from Australia, the country’s second largest export.
New Zealand Dollar (NZD) Dented by Risk-Off Trade
The New Zealand Dollar (NZD) also trended lower overnight as a risk-off tone in markets undermined demand for the safe-haven ‘Kiwi’.