Pound (GBP) Rallies from Lows on Brexit Hopes
The Pound (GBP) initially slumped on Wednesday amidst reports that Boris Johnson is contemplating a second lockdown following an alarming rise in daily coronavirus deaths.
However, Sterling rebounded later in the session, buoyed by reports of progress in UK-EU Brexit trade talks and hopes a deal could be reached early next month.
In the absence of any GBP data release, it’s safe to assume that Brexit and coronavirus will continue to act as key catalysts today, likely infusing fresh volatility into the Pound.
The Pound to Euro exchange rate is recovering so far this morning, while GBP/USD is holding.
Euro (EUR) Slumps as Germany and France Re-Enter Lockdown
The Euro (EUR) was left on the back foot yesterday as record increases in coronavirus infections across the continent prompted governments to start to take more drastic action to contain the virus.
This came as French President Emmanuel Macron announced a second national lockdown, whilst Germany imposed a ‘partial’ lockdown.
There are plenty of economic releases to keep EUR investors busy through today’s session, but the highlight will no-doubt be the European Central Bank’s (ECB) latest rate decision.
No policy changes are expected from the ECB this week, but we may see some dovish forward guidance from the bank weigh on the Euro.
US Dollar to Euro Climbs as USD Surges amid Covid-Driven Sell-Off
The US Dollar (USD) came out on top during Wednesday’s trading session, with the US Dollar to Euro exchange rate gaining to €0.85.
Investors flocked to the safe-haven currency as coronavirus panic prompted a broad market sell-off.
Further endearing the US Dollar to traders was the heightened uncertainty surrounding the US presidential election. Biden is currently leading in the polls, but Trump’s surprise win in 2016 continues to play on investors’ minds.
Centre stage today will be the latest US GDP estimate. Economists are forecasting a healthy rebound in growth in the third quarter, but will this been enough to cheer markets or undermine the safe-haven appeal of the US Dollar?
Canadian Dollar (CAD) Slumps as BoC Warns of Slowing Recovery
The Canadian Dollar (CAD) tumbled yesterday in response to the Bank of Canada’s (BoC) warning that Canada’s economic recovery is expected to slow ‘markedly’ in the fourth quarter.
Pilling further pressure on the commodity-linked ‘Loonie’ was also a sharp sell-off of oil on Wednesday, with Brent crude plunging over 5% on fears that new lockdowns will hit demand.
Australian Dollar (AUD) Tumbles in Risk-Off Trade
After plunging through Wednesday’s European trading session, the Australian Dollar (AUD) remained on the defensive overnight as concerns over new lockdowns continued to weigh on market sentiment.
New Zealand Dollar (NZD) Undermined by Gloomy Mood
The New Zealand Dollar (NZD) also struggled in overnight trade, with the ‘Kiwi’ stuck at a one-week low amid a slump in market risk appetite.