Pound (GBP) Slips as UK GDP Contracts
The Pound (GBP) was on the defensive at the end of last week’s session as markets reacted to the UK’s latest monthly GDP figures.
While the 2.6% contraction in November wasn’t as bad as had been forecast, most economists still agreed that the slump was large enough that a double-dip recession for the UK this winter is unavoidable.
Looking to the week ahead, GBP investors will be keeping a close eye on UK coronavirus developments amidst ongoing speculation that the government could impose strict lockdown measures.
Euro (EUR) Undermined by USD Strength
The Euro (EUR) fell victim to some selling pressure on Friday as the single currency’s negative correlation with the US Dollar (USD) saw it stumble as the latter strengthened.
Further limiting the appeal of the Euro were ongoing concerns over the political situation in Italy, after Matteo Renzi pulled his Italia Viva party from the ruling coalition, triggering a potential political crisis.
In focus for EUR investors this week is likely to be the European Central Bank’s (ECB) first policy meeting of 2021, with the Euro potentially facing some pressure if policymakers voice their concern over the recent appreciation in EUR exchange rates.
US Dollar (USD) Rallies in Gloomy Trade
The US Dollar shot higher at the end of last week as demand for the safe-haven currency was bolstered by a souring of market sentiment.
This appeared to be primarily driven by concerns over President-elect Joe Biden’s stimulus announcement, as his suggestion that ‘everyone must pay their fair share’ appeared to be a strong hint that taxes will be raised.
Coming up this week, it seems safe to assume that Joe Biden’s first days in office will be in the spotlight for USD investors.
USD investors will be looking to the new administration to lay out its plans for its green recovery, and what to expect in the way of potential tax hikes.
Canadian Dollar (CAD) Retreats as Oil Prices Slip
The Canadian Dollar (CAD) fell back on Friday as the appeal of the commodity-linked ‘Loonie’ was undermined by a drop in oil prices.
Australian Dollar (AUD) Weakens in spite of Upbeat Chinese GDP
After plunging at the end of last week, the Australian Dollar (AUD) remained on the defensive through the start of this week’s session, as the prevailing risk-off tone overshadowed some positive Chinese GDP figures, which may have otherwise bolstered the China-proxy ‘Aussie’.
New Zealand Dollar (NZD) Undermined by Risk-Off Trade
The New Zealand Dollar (NZD) also fell victim to the souring market sentiment in overnight trade, with investors steering clear of the ‘Kiwi’ amidst growing concerns over the global coronavirus situation.