Daily Currency Update: GBP/EUR Dented by Brexit and Coronavirus Fears

Pound to Euro Weakens, GBP/USD Holds on Brexit and Coronavirus Concerns

The Pound (GBP) stumbled again yesterday, with the Pound to Euro exchange rate falling below €1.10.

Persistent Brexit uncertainties and concerns over the UK’s coronavirus situation undermined Sterling as Manchester entered the strictest tier of coronavirus restrictions.

Also putting pressure on Sterling were comments from Bank of England (BoE) policymaker Gertjan Vlieghe, in which he warned that unemployment could surge past the BoE’s 7.5% forecast by the end of the year.

Meanwhile, data published this morning revealed that UK inflation crept back up to 0.5% in September, while Brexit optimism has increased after EU negotiator Michel Barnier said a UK-EU deal is ‘within reach’.

This has pushed the Pound to Euro back higher, while GBP/USD is also strengthening so far this morning.


Euro (EUR) Buoyed by Upbeat Trade

EUR exchange rates struck higher on Tuesday, with the single currency finding support following an improvement in market sentiment.

This uptick in the Euro received further support from Germany’s latest producer price index, which beat expectations with a 0.4% rise in September, pushing the Euro to US Dollar to a month high.

However, the Euro could struggle to consolidate these gains as the threat of more coronavirus restrictions in the Eurozone leaves the single currency vulnerable to fresh weakness.


US Dollar to Euro Sinks to Month Low on Stimulus Optimism

The US Dollar (USD) experienced broad selling pressure through yesterday’s session as hopes for another US stimulus package undermined the appeal of the safe-haven ‘Greenback’.

Despite a deadline imposed by Speaker of the US House of Representatives Nancy Pelosi for Tuesday, talks are continuing, boosting hopes that a deal could be found before the election.

In the absence of any notable USD data today, we may see US election speculation act as the driving force behind the US Dollar. Will rising political uncertainty help to boost the ‘Greenback’?


Canadian Dollar (CAD) Flat as Oil Prices Tick Lower

The Canadian Dollar (CAD) was left mostly rangebound on Tuesday as softer oil prices limited demand for the commodity-linked ‘Loonie’.

However, CAD exchange rates could rally later today should Canada’s latest inflation and retail sales figures print positively.


Australian Dollar (AUD) Rallies in Risk-On Trade

The Australian Dollar (AUD) struck higher overnight on Tuesday, with upbeat market sentiment and an improvement in domestic retail sales growth through September strengthening the ‘Aussie’.


New Zealand Dollar (NZD) Strengthens on Upbeat Sentiment

The New Zealand Dollar (NZD) also trended higher in overnight trade, with the risk-sensitive ‘Kiwi’ benefiting from the upbeat market mood.

Matthew Andrews

Contact Matthew Andrews