Pound (GBP) Undermined by Lockdown Fears
The Pound to US Dollar and Euro exchange rates are slipping so far this morning after Saturday’s announcement of another UK lockdown pressures GBP exchange rates.
Sterling had initially strengthened at the end of last week’s session, with Sterling sentiment cheered by cautious Brexit optimism after European Commission President Ursula Von der Leyen’s suggestion that talks are making ‘good progress’.
But these gains didn’t last for long, with Sterling closing Friday’s European session virtually unchanged as speculation of a second national lockdown undermined the currency.
This speculation proved to be correct over the weekend following Boris Johnson’s announcement of a second national lockdown, which will likely weigh on GBP exchange rates through today’s session.
Euro (EUR) Stabilises on Upbeat GDP
After tumbling through most of last week’s session, the Euro (EUR) stabilised on Friday after the Eurozone reported a strong return to growth in the third quarter.
While Eurozone GDP surged to 12.7% between July and September, it was not enough to allow the Euro to reverse its recent losses as EUR investors remained preoccupied by the threat of another downturn through the winter.
Looking ahead, the Euro looks vulnerable to additional pressure this week as surging coronavirus cases likely point to more European lockdowns on the horizon.
US Dollar (USD) Momentum Fades amidst Profit Taking
The US Dollar (USD) softened at the end of last week’s session as the ‘Greenback’ experienced some profit taking after soaring to a one-month high on Thursday.
However, a prevailing risk-off mood helped to ensure any USD selling was limited in scope, with investors still unnerved by the threat of the global economic recovery being derailed by the second wave of coronavirus infections.
Turning to this week’s session, the focus will undoubtedly be on the US presidential election.
With the final result not expected to be known for a week or more, and with a contested election a very real risk, this could cause investors to continue favouring the US Dollar against a backdrop of heightened US political uncertainty.
Canadian Dollar (CAD) Remains Subdued as Oil Sell-Off Continues
The Canadian Dollar (CAD) remained on the defensive on Friday as falling oil prices continued to undermine the commodity-linked ‘Loonie’, concerns over which offset a stronger-than-expected monthly GDP release.
Australian Dollar (AUD) Slips in Risk-Off Trade
The Australian Dollar (AUD) fell back overnight on Sunday, extending its losses from last week’s session as investors continued to shun the risk-sensitive ‘Aussie’.
New Zealand Dollar (NZD) Dented by Souring Market Mood
The New Zealand Dollar (NZD) is also off to a poor start this week as rising risk aversion sees traders steer clear of the ‘Kiwi’.