Pound US Dollar Dips as BoE Warns Over Future Access to EU Financial Markets

Pound (GBP) Struggles Following BoE Warning

The Pound (GBP) was mostly subdued through yesterday’s session after the Bank of England (BoE) governor Andrew Bailey warned that the EU’s demands as part of the next round of Brexit talks are ‘unrealistic’.

Bailey suggested that the EU hard negotiating stance may be a sign that it plans to cut the UK off from its financial markets, a move which would be a major blow to the UK.

Kicking off today’s session was the publication of the UK’s latest GDP release. This revealed that the UK economy expanded at a faster-than-expected pace at the end of 2020, likely allowing the UK to avoid a double-dip recession this winter.

However, any upside in Sterling looks limited so far, as the figures also revealed the UK suffered a record fall in annualised growth.

Euro (EUR) Extends Gains on USD Weakness

The Euro’s (EUR) negative correlation with the US Dollar (USD) saw the single currency continue to benefit from the broad weakness of its most traded peer on Thursday.

But as always recently, the Euro also found its gains tempered by concerns that the EU’s slow vaccination rollout will hamper the Eurozone’s economic recovery.

In the absence of any notable EUR data releases today, it’s likely movement in the Euro will continue to be dictated by its relationship with the US Dollar.

US Dollar (USD) Dented by Falling Treasury Yields

The US Dollar (USD) maintained its bearish trajectory through yesterday’s trading session, with the ‘Greenback’ continuing to be punished by falling US Treasury yields as well as a prevailing risk-on tone.

Adding to the US Dollar’s woes was also the publication of some disappointing US data revealing a larger-than-expected rise in US jobless claims last week.

Coming up, the University of Michigan will publish its latest consumer sentiment index later this afternoon. Will an improvement in consumer confidence this month help to shore up the US Dollar?

Canadian Dollar (CAD) Muted as OPEC Lowers 2021 Oil Forecasts

The Canadian Dollar (CAD) struggled to attract investors on Thursday, as the appeal of the oil-sensitive ‘Loonie’ was knocked after the Organization of the Petroleum Exporting Countries’ (OPEC) latest monthly report saw the cartel revise its 2021 global oil demand forecasts lower.

Australian Dollar (AUD) Stalls as Risk Appetite Weakens

The Australian Dollar (AUD) hit a wall overnight on Thursday as waning risk appetite dampened the appeal of the high-yield ‘Aussie’ and ended its recent bullish run.

New Zealand Dollar (NZD) Slips in Spite of Positive PMI Figures

The New Zealand Dollar (NZD) was also knocked by the reversal in risk flows in overnight trade, with NZD investors largely shrugging off some impressive domestic PMI figures.

Matthew Andrews

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