Pound to US Dollar Jumps Over Half a Cent as BoE Downplays Negative Rate Speculation

Pound to US Dollar and Euro Soars as BoE’s Bailey Plays Down Negative Rates

The Pound (GBP) roared higher during yesterday’s trading session following comments from Bank of England (BoE) governor Andrew Bailey regarding negative interest rates.

While Bailey warned that the UK economy is in a ‘very difficult period’, GBP investors seized on his apparent downplaying of negative interest rates as he suggested ‘there are a lot of issues’ with such a move.

Looking ahead, the focus for GBP investors is likely to be on UK coronavirus developments as any further surge in cases could see the government impose stricter coronavirus restrictions.

 

Euro Slips as German Lockdown May Last into April

The Euro (EUR) was on the defensive on Tuesday following the news that Germany could remain in lockdown until April.

As the new more-infectious strain of the coronavirus from the UK spreads throughout the country, German chancellor Angela Merkel signalled that the current national lockdown will likely extend for another eight to ten weeks in order to prevent a 10-fold increase in infections.

Coming up this morning the focus for EUR investors will be on a speech by European Central Bank President Christine Lagarde, whose potential comments on the Eurozone’s economic outlook are likely to offer some direction to the single currency.

 

US Dollar Slips amid Equity Rebound

A rally in equity markets saw the US Dollar (USD) retreat yesterday as investors reversed their positions in the safe-haven currency.

However, tempering the US Dollar’s losses was speculation that the Federal Reserve is looking to start winding down its currency stimulus programme, as a growing number of policymakers express optimism about the post-pandemic economy.

Turning to today’s session the spotlight looks to be on the latest US consumer price index. As December’s figures are expected to report a modest improvement in inflation, will this push the Fed toward tapering its stimulus?

 

Canadian Dollar Firms as Oil Prices Jump

The Canadian Dollar (CAD) ticked higher on Tuesday as news that WTI crude prices had struck their highest levels since February at $53 a barrel helped to bolster the appeal of the oil-sensitive ‘Loonie’.

 

Australian Dollar Muted as Coronavirus Concerns Temper Risk Appetite

After racing higher through Tuesday’s European session, the Australian Dollar (AUD) pared some of its gains in overnight trade, as demand for the risk-sensitive ‘Aussie’ was undermined by concerns over surging global coronavirus cases.

 

New Zealand Dollar Muted in Cautious Trade

The New Zealand Dollar (NZD) found itself treading water overnight on Tuesday, as fears over the rise in global coronavirus cases diminished the appeal of the ‘Kiwi’.

Matthew Andrews

Contact Matthew Andrews


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