Pound (GBP) Slides as Brexit Uncertainty Dominates
The Pound (GBP) was on the defensive at the end of last week’s session, as fears that the UK could be heading for a no-deal Brexit continued to unnerve GBP investors.
This sent the Pound to Euro exchange rate to a two-week low, while GBP/USD continues to hold at $1.33.
While the EU’s chief Brexit negotiator, Michel Barnier, confirmed that he would be travelling back to London to continue trade talks, he warned that ‘significant divergences’ between the UK and EU remain and that he is unable to confirm whether a deal will be possible.
Looking ahead, it’s safe to assume that Brexit will be the focus for GBP investors this week, potentially leaving the Pound vulnerable to some losses if headlines remain broadly negative.
Euro (EUR) Buoyed by US Weakness
The Euro (EUR) rallied on Friday as the single currency continued to benefit from broad weakness in the US Dollar (USD) thanks to the negative correlation in the pairing.
This allowed the Euro to maintain its upward trajectory in spite of the Eurozone’s latest economic sentiment index reporting that the economic outlook for the bloc has deteriorated this month.
Top of the agenda at the start of this week’s session will be the publication of Germany’s consumer price index. Will another month of deflation in November drive the Euro lower this afternoon?
US Dollar (USD) Extends Downside on Coronavirus Concerns
The US Dollar closed last week on a low, with investors shying away from the US currency amidst growing concern over the health of the US economy as a third wave of coronavirus infections sweep through the country.
Adding to the US Dollar’s woes was the generally upbeat market tone which has emerged in recent weeks, with vaccine optimism and an improving outlook limiting safe-haven demand.
Turning to the week ahead, there will be plenty of high-profile data releases for USD investors, the highlight of which will undoubtedly be Friday’s payroll figures.
Canadian Dollar (CAD) Strengthens as WTI Oil Trades Above $45
The Canadian Dollar (CAD) ticked higher on Friday, with the commodity-linked ‘Loonie’ able to find modest gains as WTI crude held above $45 a barrel, just below the eight-month high struck earlier in the week.
Australian Dollar (AUD) Knocked by Tensions with China
The Australian Dollar (AUD) opens this week on the defensive, amidst concerns over an escalation of tensions between Australia and China after an Official Chinese twitter account shared a ‘fake image’ alluding to Australian war crimes in Afghanistan.
New Zealand Dollar (NZD) Firms on Upbeat Chinese Data
The New Zealand Dollar (NZD) ticked higher in overnight trade, with the appeal of the ‘Kiwi’ bolstered by some strong Chinese PMI figures.