Pound to Euro Fluctuates on Friday in Day of Mixed Brexit Signals: Update 16-10-20 16:45
The Pound to Euro exchange rate recovered at the end of today’s session after choppy trade.
GBP/EUR had dropped sharply after Boris Johnson told the UK to prepare for an Australia-style no-deal Brexit.
However, the Pound recovered as EU officials appeared to confirm UK-EU talks will continue next week, while Johnson failed to rule out talks continuing.
This offset comments from a spokesperson for the UK Prime Minister who suggested talks should end unless the EU changes its position.
Pound to US Dollar Slips as London Faces Tier Two Restrictions, GBP/EUR Holds
GBP exchange rates broadly fell on Thursday, with the Pound to US Dollar exchange rate losing two cents.
The announcement that millions of people across England, including those in London, will face stricter coronavirus restrictions from this weekend spooked GBP investors.
However, the slump in Sterling was offset somewhat by some Brexit optimism as a spokesperson for Boris Johnson reiterated the UK’s desire to find a trade deal with the EU.
This may be put to the test today, however, as Johnson will need to decide whether to extend talks after already missing his 15 October deadline, with the Pound expected to strengthen if the PM opts to stick with talks.
After a series of fluctuations through Friday’s session, the Pound is back near levels at the start of the day. GBP/USD is slightly up while the Pound to Euro exchange rate is flat.
Euro (EUR) Undermined by Coronavirus Concerns
The Euro (EUR) was placed on the defensive yesterday as Europe’s struggle with the coronavirus saw countries in the Eurozone impose even stricter restrictions.
EUR investors were particularly concerned by the new curfew in Paris and Germany’s announcement of ‘considerable restrictions’, both of which will no doubt hurt economic growth in the bloc.
The Euro looks to remain vulnerable to fresh coronavirus jitters this morning, but could rally later in the session if EU leaders are able to agree on a way to better collaborate in their response to the second coronavirus wave at today’s summit.
US Dollar (USD) Surges in Risk-Off Trade
The US Dollar (USD) shot higher on Thursday, with investors flocking to the safe-haven currency as coronavirus concerns prompted a sell-off in equity markets.
Reinforcing the risk-off mood was the publication of last week’s US jobless claims. These saw claims spike to their highest level since August, sending a strong signal that the recovery in the US labour market has stalled.
Today’s US retail sales figures for September unexpectedly jumped on Friday to 1.9% month-on-month, its fastest growth since June. This supported USD exchange rates, although the US Dollar to Pound and Euro slipped amid more upbeat trade.
Canadian Dollar (CAD) Dented by Oil Slump
The Canadian Dollar (CAD) fell back yesterday as WTI crude prices plunged over 3% while the commodity suffered in a wider market sell-off, undermining the oil-sensitive ‘Loonie’.
Australian Dollar (AUD) Dented by RBA Speculation
The Australian Dollar (AUD) ticked lower overnight on Thursday, undermined by risk-off trade and growing expectations that the Reserve Bank of Australia (RBA) will ease its monetary policy next month.
New Zealand Dollar (NZD) Weakens in Risk-Off Trade
The New Zealand Dollar (NZD) also retreated overnight as a souring of market risk appetite, due to concerns over the coronavirus pandemic, weakened the appeal of the risk-sensitive ‘Kiwi’.